The Consumer Financial Protection Bureau (CFPB) is a central part of President Obama's historic Wall Street Reforms. Their job is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products. Many people have expressed confusion about this agency, so we put together answers to some of the questions we've been asked.
What is the Consumer Financial Protection Bureau?
Why do we need a Consumer Financial Protection Bureau?
Why is it so important to regulate these so-called non-bank financial institutions?
How can the Consumer Financial Protection Bureau protect me and my money?
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What is the Consumer Financial Protection Bureau?
The Consumer Financial Protection Bureau (CFPB) was created to make sure that the financial products and services that Americans depend on every day —including credit cards, mortgages, and loans—work better for the people who use them.
Established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, CFPB is charged with overseeing the Federal financial laws that specifically protect consumers—people who keep their money in banks and credit unions, pay for goods and services with their credit cards, and rely on loans to buy homes or pay for college, among other services.
The Bureau is tasked with making sure people understand the fine print that explains the risks involved in using these services, and ensuring the banks, credit unions, and other financial companies that provide them play by the rules.
Why do we need a Consumer Financial Protection Bureau?
Before CFPB was established, seven different Federal agencies were responsible for various aspects of consumer financial protection. No single agency had effective tools to set the rules or oversee the whole market, and that is part of what led to an economic crash of epic proportions. As President Obama explained in his speech in Osawatomie:
We all know the story by now: Mortgages sold to people who couldn’t afford them, or sometimes even understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets – and huge bonuses – made with other people’s money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn’t have the authority to look at all.
Moving forward, CFPB will be the single, consumer-focused regulating authority, consolidating the existing authorities scattered throughout the Federal government under one roof. And, the Bureau’s oversight includes the large banks and credit unions that had historically been regulated by the Federal government, as well as independent and privately owned “non-bank financial institutions” that had never been regulated before.
This means that for the first time, the Federal government will be able to regulate the activities of independent payday lenders, private mortgage lenders and servicers, debt collectors, credit reporting agencies, and private student loan companies.
Fonte: White House