The Dodd-Frank Wall Street Reform and Consumer Protection Act: Title X, The Consumer Financial Protection Bureau

Summary

In the wake of what many believe is the worst U.S. financial crisis since the Great Depression, the Obama Administration proposed sweeping reforms of the financial services regulatory system—including the creation of an executive agency with authority over consumer financial issues, the broad outline of which has been encompassed in a document called the Administration’s White Paper (the White Paper). The House of Representatives began consideration of bills seeking similar reform, which in large part were shepherded by Representative Barney Frank, Chairman of the Committee on Financial Services. On December 11, 2009, the House approved H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009. On May 20, 2010, the Senate approved its own financial reform measure, H.R. 4173, the Restoring American Financial Stability Act of 2010. (For an analysis of the consumer protection provisions of these proposals and how they varied, see CRS Report R40696, Financial Regulatory Reform: Consumer Financial Protection Proposals, by David H. Carpenter and Mark Jickling; for an overview of the overall financial reform proposals, see CRS Report R40975, Financial Regulatory Reform and the 111th Congress, coordinated by Baird Webel.)

A conference committee, chaired by Representative Frank and Senator Christopher Dodd, Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, was formed to reconcile the two bills. On June 25, 2010, the conference committee agreed to file a conference report for H.R. 4173, renamed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). On June 30, 2010, the House approved the conference report. The Senate approved the measure on July 15, 2010. The bill was signed into law on July 21, 2010, by President Obama as P.L. 111-203.

Title X of the Dodd-Frank Act is entitled the Consumer Financial Protection Act of 2010 (CFP Act). The CFP Act establishes a Bureau of Consumer Financial Protection (CFPB or Bureau) within the Federal Reserve System with rulemaking, enforcement, and supervisory powers over many consumer financial products and services and the entities that sell them. The law also transfers to the Bureau the primary rulemaking and enforcement authority over many federal consumer protection laws enacted prior to the Dodd-Frank Act (the “enumerated consumer laws”), such as the Truth in Lending Act and the Real Estate Settlement Procedures Act.

This report provides a legal overview of the regulatory structure of consumer finance under existing federal law, which is followed by an analysis of how the CFP Act will change this legal structure, with a focus on the Bureau’s organization and funding; the entities and activities that fall (and do not fall) under the Bureau’s supervisory, enforcement, and rulemaking authority; the Bureau’s general and specific rulemaking powers and procedures; and an analysis of the act’s preemption standards over state consumer protection laws as they apply to national banks and thrifts.