CFPB Purposes And Functions

The Bureau of Consumer Financial Protection (CFPB) was established as an independent bureau of the Federal Reserve System by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, 124 Stat. 1376) (Dodd-Frank Act). Pursuant to the Dodd-Frank Act, the CFPB has rulemaking, supervisory, enforcement, and other authorities relating to consumer financial products and services. Among these are the consumer financial protection authorities that transferred to the CPFB from seven Federal agencies on the designated transfer date, July 21, 2011. These authorities include the ability to issue regulations under more than a dozen Federal consumer financial laws.

As provided in section 1021 of the Dodd-Frank Act, the purpose of the CFPB is to implement and enforce Federal consumer financial laws consistently for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that such markets are fair, transparent, and competitive. The CFPB is authorized to exercise its authorities for the purpose of ensuring that:

(1) Consumers are provided with timely and understandable information to make responsible decisions about transactions involving consumer financial products and services;

(2) Consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination;

(3) Outdated, unnecessary, or unduly burdensome regulations concerning consumer financial products and services are regularly identified and addressed in order to reduce unwarranted regulatory burdens;

(4) Federal consumer financial law is enforced consistently, without regard to status as a depository institution, in order to promote fair competition; and

(5) Markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.

CFPB Regulatory Priorities

The CFPB's regulatory priorities for the period from [November 1], 2013, to [October 31], 2014, include continuing work to implement Dodd-Frank Act mortgage protections, a series of rulemakings to address critical issues in other markets for consumer financial products and services, and following up on earlier efforts to streamline and modernize regulations that the Bureau has inherited from other Federal agencies.

Implementing Dodd-Frank Act Mortgage Protections

As reflected in the CFPB's semiannual regulatory agenda, a principal focus of the CFPB is the Bureau's continuing efforts to implement critical consumer protections under the Dodd-Frank Act to guard against mortgage market practices that contributed to the nation's most significant financial crisis in several decades.

To that end, a major effort of the Bureau is the expected imminent issuance by the Bureau of its final rule combining several disclosures that consumers receive in connection with applying for and closing on a mortgage loan under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The project to integrate and streamline the disclosures is mandated under the Dodd-Frank Act both to increase consumer understanding of mortgage transactions and to facilitate compliance by industry. The integrated forms are the cornerstone of the Bureau's broader "Know Before You Owe" initiative and will be supplemented by consumer education programs and regulatory implementation support programs going forward.

In addition, the Bureau's regulatory priorities include continuing rulemaking activities to implement a number of mortgage-related requirements under title XIV of the Dodd-Frank Act that are designed to strengthen consumer protections involving the origination and servicing of mortgages. The Bureau issued several implementing regulations in January 2013, most of which will take effect in January 2014. The mortgage rules issued by the Bureau included rules on determining a consumer's ability to repay a mortgage loan, and on "qualified mortgages"; and rules on mortgage servicing; loan originator compensation; escrow requirements for higher-priced mortgages; appraisal requirements under the Equal Credit Opportunity Act; an interagency rule on appraisals for higher-risk mortgage loans; and a rule implementing changes to requirements for high-cost mortgages.

Since the issuance of its January 2013 final rules, the Bureau has issued several clarifications and revisions to address interpretive issues and facilitate compliance with the new requirements. The Bureau also plans to engage in a further rulemaking after the January 2014 effective date, to consider certain additional refinements to the final rules. For example, the Bureau plans to further examine certain provisions of the Dodd-Frank Act that create exceptions to new requirements for small creditors that operate predominantly in "rural or underserved areas." The Bureau plans to engage in additional research and analysis concerning the definition of "rural or underserved" in order to address potential concerns regarding access to credit. The Bureau has also agreed to consider issuing additional guidance to facilitate the development of automated underwriting systems for originating qualified mortgages.

The Bureau is also participating in a series of interagency rulemakings to implement various Dodd-Frank Act amendments to TILA and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) relating to mortgage appraisals. These include supplementing an earlier interagency TILA final rule issued in January 2013 relating to requirements for higher-risk mortgages and implementing certain other Dodd-Frank Act amendments to FIRREA concerning regulation of appraisal management companies and automated valuation models.

Another major rulemaking priority for the Bureau is the implementation of the Dodd-Frank Act amendments to the Home Mortgage Disclosure Act (HMDA) that require supplementation of existing data reporting requirements regarding housing-related loans and applications for such loans. The Bureau has already begun work in preparation for this effort. In addition to obtaining data that is critical to the purposes of HMDA, including providing the public and public officials with information to enable them to determine whether financial institutions are meeting the needs of their communities, assist public officials in the distribution of public sector investments, and identify potential fair lending issues, the Bureau views this rulemaking as a potential opportunity to fulfill its mission under the Dodd-Frank Act to reduce unwarranted regulatory burden. In coming months, the Bureau expects to conduct extensive outreach to stakeholders, including convening a panel under the Small Business Regulatory Enforcement Fairness Act in conjunction with the Office of Management and Budget and the Small Business Administration's Chief Counsel for Advocacy to consult with small lenders who may be affected by the rulemaking.

Bureau Regulatory Efforts in Other Consumer Financial Markets

In addition to the implementation of the Dodd-Frank Act mortgage related amendments, the Bureau is also working on a number of rulemakings to address important consumer protection issues in other markets for consumer financial products and services. Much of this effort will be based on previous work of the Bureau such as Requests for Information, Advance Notices of Proposed Rulemaking (ANPRMs), and previously issued Bureau studies and reports. For instance, the Bureau issued an ANPRM on debt collection. Debt collection is the focus of more consumer complaints to the Federal Government than any other industry. See Consumer Financial Protection Bureau, Fair Debt Collection Practices Act: CFPB Annual Report (March 20, 2013), at 14. The Bureau has also been engaged in extensive research and analysis concerning payday loans, deposit advance products, and bank overdraft programs, building on Bureau white papers issued in April and June 2013. The Bureau is considering whether rules governing these products may be warranted to address disclosures or industry practices.

Bureau work is also continuing on a number of earlier initiatives concerning consumer payment services. Following on an earlier ANPRM concerning general purpose reloadable prepaid cards, for example, the Bureau is now engaged in consumer testing of potential disclosures as well as other research and analysis. The Bureau expects to issue a Notice of Proposed Rulemaking concerning prepaid cards in mid-2014. In addition, the Bureau expects early next year to begin work on a further rulemaking concerning consumer remittance transfers to foreign countries. The rulemaking will address whether to extend a provision under the Dodd-Frank Act that allows insured depository institutions to estimate certain information for purposes of consumer disclosures. The provision will sunset in July 2015, unless the Bureau exercises authority to extend it for up to five years.

The Bureau is continuing rulemaking activities that will further establish the Bureau's nonbank supervisory authority by defining larger participants of certain markets for consumer financial products and services. Larger participants of such markets, as the Bureau defines by rule, are subject to the Bureau's supervisory authority.

Bureau Regulatory Streamlining Efforts

Another priority for the Bureau is continuing work on an earlier initiative to consider opportunities to modernize and streamline regulations that it inherited from other agencies pursuant to a transfer of rulemaking authority under the Dodd-Frank Act. In addition to completing work on the TILA-RESPA disclosure project to consolidate and streamline Federal mortgage forms, the Bureau is planning as part of the HMDA rulemaking described above to explore opportunities to reduce unwarranted regulatory burden concerning reporting of mortgage application and origination activity. The Bureau is also expecting to issue a Notice of Proposed Rulemaking in 2014 to explore whether to modify certain requirements under the Gramm-Leach-Bliley Act's implementing Regulation P to which financial institutions provide annual notices regarding their data sharing practices. The Notice will follow up on comments that the Bureau has previously received suggesting that eliminating the requirement to provide such notices in certain situations - for instance perhaps where financial institutions do not share information with third parties or have not changed their practices since provision of the last annual notice - would significantly reduce compliance burden for industry and unwanted paperwork for consumers.

Additional Analysis, Planning, and Prioritization

The Bureau is continuing to assess timelines for the issuance of additional Dodd-Frank Act related rulemakings and rulemakings inherited by the CFPB from other agencies as part of the transfer of authorities under the Dodd-Frank Act. The Bureau is also continuing to conduct outreach and research to assess issues in various other markets for consumer financial products and services. For example, as directed by Congress, the Bureau is conducting a study on the use of agreements providing for arbitration of consumer disputes in connection with the offering or providing of consumer financial products or services. Upon completion of this study, the Bureau will evaluate possible policy responses, including possible rulemaking actions consistent with the findings of the study. The Bureau will similarly evaluate policy responses to other ongoing research and outreach, taking into account the critical need for and effectiveness of various policy tools. The Bureau will update its regulatory agenda in spring 2014 to reflect the results of further analysis, planning, and prioritization.