In the wake of the financial market collapse, Congress felt the need to reform the way the government regulates the financial system to prevent a similar event from occurring again. They passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the President signed the bill into law in July 2010. The bill is described as one of the most sweeping overhauls of the U.S. financial regulatory system since the Great Depression. The act created a new regulatory entity called the Consumer Financial Protection Bureau (CFPB). The name sounds so official you would think it’s been around for ages. Let’s delve into what led to the CFPB’s creation, and then look at how it can help you with financial decisions.
Why was the CFPB created?
Many people feel that the government did not adequately protect Americans from taking out mortgage loans that they couldn’t afford. One agency that was supposed to serve in this role was the Office of Thrift Supervision. Since the OTS apparently failed at its job, Congress ordered its closure in the Dodd-Frank Act. The CFPB, with 1,200 full-time employees, became the primary agency charged with protecting consumers in the marketplace. While it is technically in the Federal Reserve System, it is an independent bureau. The CFPB will move into the former OTS building, across the street from the White House, once the outdated building is renovated.
How does the CFPB help protect you?
The CFPB says its central mission is to “make markets for consumer financial products and services work for Americans.” While this mission statement might sound slightly vague, they go on to explain that they will work to ensure that consumers have the information to make financial decisions related to credit cards, mortgages, students loans, prepaid cards, and other kinds of consumer financial products and services. While financial education is its core mission, the CFPB will also have enforcement duties. They describe themselves as a “neighborhood cop,” supervising banks, credit unions, and financial companies. Lastly, the CFPB will attempt to protect you by researching consumer behavior, financial service providers, and financial markets.
How can you take advantage of the bureau?
The CFPB recently launched a fantastic new website that reads more like a stylish blog than an antiquated government website. Under the “Get Help Now” tab you can find a wealth of information and links to other websites that can inform you on everything from monthly budgeting to investment decisions. You can also sign up for email updates at the bottom of any of the pages.
The CFPB is making a noticeable effort to communicate with consumers and respond to their questions and comments. They have a video section where employees discuss what they do at the CFPB. They also have a blog where they respond to consumer questions. If you want to contact the CFPB, scroll to the bottom of any page and click “Let Us Know” under the Information category. Elizabeth Warren—the woman appointed by President Obama to head the CFPB—encourages visitors to continue to share their input in order to build a stronger consumer bureau.