The Consumer Financial Protection Bureau (“CFPB”) has made headlines
recently, even becoming the target of attack ads repeatedly broadcast during the Republican presidential debate hosted by Fox Business Network. The only thing more obscure than the ad is the agency itself.
It’s largely believed that the 2007 financial crisis was a result of the lack of regulation at the time. This belief led to widespread calls for financial reform in hopes of avoiding another financial crisis and increased protection for consumers.
Born out of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is a consumer agency tasked with “[promoting] fairness and transparency for mortgages, credit cards, and other consumer financial products and services,” according to the U.S. Department of Treasury. Their goal, found on their website, is “watching out for American consumers in the market for consumer financial products and services.”
Despite being the brainchild of Elizabeth Warren, a former Harvard Law School professor and current United States Senator from Massachusetts, former Ohio Attorney General Richard Cordray was nominated to be the agency’s first director. Both faced opposition from Republicans; Warren, in fear of being an overly zealous regulator, and Cordray for the agency’s centralized structure.
Penned by Kentucky Senator Mitch McConnell, a letter from Republicans called for a decentralized structure and congressional oversight of its actions and budget. Nevertheless, President Obama issued a highly controversial recess appointment of Richard Cordray as director of the CFPB. Cordray, is an undefeated five-time Jeopardy! champion.
In his written testimony before the House Committee on Financial Services in September, Director Cordray claims the agency’s enforcement activity has resulted in:
- More than $11 billion in relief for over 25 million consumers
- Financial institutions providing more than $248 million in redress to nearly 2 million consumers
- The handling of over 700,000 complaints from consumers addressing all manner of financial products and services
Most recently, the CFPB has turned its sights to the auto lending industry to investigate discriminatory lending practices. This in itself has caused controversy over the agency’s methodology.