Consumer Financial Protection Bureau

• Consumer Financial Protection Bureau (not Agency)

• Primary policy argument is the failure of existing federal agencies to protect consumer

• Strips federally-chartered institutions of a significant degree of charter preemption authority

Functional Units Required to be Established – a Very Large

PotentialBureaucracy

The Transfer Date – July 21,2011• Recently Announced by the

Treasury • 75 Fed. Reg. 57253

(September 20,2010)• Numerous Functions and

Authorities Effective as of the Transfer Date

• In the Meantime – Treasury is in Charge

- To be funded with civil money penalties - May be an incentive to bring CMP actions

Coverage

• Broad authority to examine and supervise a “covered person” engaged in a “financial activity” in connection with a consumer financial product or service

- Banks below $10 billion exempted from direct CFPB jurisdiction to

examine and supervise - Other significant exemptions provided by statute• Unlike other federal statutes that focus on charter

form, jurisdiction for the CFPB is based upon product or

activity

Coverage (continued)• Covered persons include the following: - Banks, Thrifts and Credit Union - Mortgage loan originators, services and brokers - Real Estate settlement companies, appraisers, appraisal management companies - Debt Collectors - Debt settlement and management services - Credit Counselors - Some scallywags as well

• A covered person also includes “related persons” – - Officers and Directors - Management and Employees - Joint Venture Partners - Independent contractors – who knowingly or recklessly participate in violations or breaches of duty, and includes • Attorneys • Appraisers • Accountants

• A covered person also includes “service providers”

What Authority is Provided?

― Alternative Mortgage Transaction Act― Equal Opportunity Act― Fair Credit Billing Act― Fair Credit Reporting Act (with exception for sections 615€ and 628― Fair Debt Collection Practices Act― Gramm-Leach-Bliliey Act , Privacy Sections, 502-509― Home Mortgage Disclosure Act― Home Ownership and Equity Procedures Act― Real Estate Settlement Procedures Act― S.A.F.E. Mortgage Licensing Act― Truth-in-Lending Act

What Authority is Provided…Continued…• Monitoring and data gathering authority

• “Super” disclosure authority to prescribe rules to ensure that a consumer financial product is fully and completely described to a consumer

• Examination, supervision and enforcement authority over non-exempted covered persons

• Provides the CFPB with authority to declare an act or practice by a provider of a consumer financial product or service to be an unfair, deceptive or abusive act or practice