After the near collapse of the banking industry in September 2008, blame was spread from “banks too big to fail,” to federal regulators in bed with the industry, to hustling borrowers taking on more debt than they could ever hope to repay.

Believing consumers needed more help dealing with the banks, the Obama Administration tapped Harvard law school professor Elizabeth Warren (now Democratic Senate candidate in Massachusetts) to design a new federal agency to help home buyers, credit card holders, students and other borrowers better manage their relations with lenders.

The Consumer Financial Protection Bureau (CFPB) was the result, established under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. After bank lobbyists and Republicans baulked at the suggestion that Warren run the new agency, Obama appointed Director Richard Cordray in January 2012. The Bureau has several core functions:

  • Conduct rule-making, supervision and enforcement for Federal consumer financial protection laws
  • Restrict unfair, deceptive or abusive acts or practices
  • Take consumer complaints
  • Promote financial education
  • Research consumer behavior
  • Monitor financial markets for new risks to consumers
  • Enforce laws that outlaw discrimination and other unfair treatment in consumer finance

The site has an Ask CFPB page to which consumers can submit questions and review a long list of frequently asked questions about financial matters. It provides a means to submit complaints about loans or lenders, along with a means to track responses from the Bureau. It also provides a form for consumers to “tell your story” about experiences dealing with lending institutions and policies. In addition, its Office of Administrative Adjudication holds hearings and decides formal charges and actions initiated by the CFPB.

Already, the Bureau is drawing sharp criticism from bank lobbyists, but it has potential to become a valued resource for consumers.

[Steve Clark]