Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau is an independent agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors, for-profit colleges, and other financial companies operating in the United States.
The agency was originally proposed in 2007 by Elizabeth Warren while she was a law professor and she played an instrumental role in its establishment. The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the 2008 financial crisis and the subsequent Great Recession, and is an independent bureau within the Federal Reserve.
Since its founding, the agency has returned more than $21 billion to consumers who were defrauded by financial institutions. The agency has established or proposed rules to cap overdraft charges and credit card late fees; prohibit medical debt from credit reports; limit the ability of data brokers to sell personal data; and limit predatory payday loan practices. The agency is funded through penalties collected with its enforcement actions and through transfers from the Federal Reserve.
Throughout its existence, the CFPB has been persistently targeted by Republican politicians and the financial industry. The CFPB's status as an independent agency has been subject to many challenges in court. In June 2020, the United States Supreme Court ruled that the president can remove the director without cause but allowed the agency to remain in operation. In 2024, the Supreme Court affirmed the constitutionality of the CFPB funding mechanism prescribed by Congress. At the outset of his second presidential term, Donald Trump appointed an acting director who immediately ordered the CFPB to stop regulatory activity, and sought to fire 90% of the agency's staff.
Role
According to former director Richard Cordray, the bureau's priorities are mortgages, credit cards and student loans. The CFPB qualifies as a large independent agency that was designed to consolidate its employees and responsibilities from a number of other federal regulatory bodies, including the Federal Reserve, the Federal Trade Commission, the Federal Deposit Insurance Corporation, the National Credit Union Administration and even the Department of Housing and Urban Development. The bureau is an independent unit located inside and funded by the United States Federal Reserve, with interim affiliation with the U.S. Treasury Department. The CFPB's Federal Reserve-based funding has come under scrutiny by the bureau's critics.The CFPB writes and enforces rules for financial institutions, examines both bank and non-bank financial institutions, monitors and reports on markets, as well as collects and tracks consumer complaints.
The CFPB opened its website in early February 2011 to accept suggestions from consumers via YouTube, Twitter, and its own website interface. According to the United States Treasury Department, the bureau is tasked with the responsibility to "promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services". According to its website, the CFPB's "central mission...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". In 2016 alone most of the hundreds and thousands of consumer complaints about their financial services—including banks and credit card issuers—were received and compiled by CFPB and are publicly available on a federal government database.
Once a financial institution acquires $10billion in assets, it falls under the guidance, rules, and regulations under the CFPB- is a "CFPB regulated bank". The CFPB will examine the institution for compliance with bank regulatory laws.
The regulations implemented by the bureau are in Chapter X of Title XII Banks and Banking of the US Code of Federal Regulations. Notable examples include the ECOA, HMDA, Alternative Mortgage Transaction Parity Act of 1982, EFTA, FDCPA, FCRA, RESPA, TILA, and Truth in Savings Act.
History
In July 2010, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, during the 111th United States Congress in response to the Great Recession and 2008 financial crisis. The agency was originally proposed in 2007 by then-Harvard Law School professor Elizabeth Warren, who later became a US senator. The proposed CFPB was actively supported by Americans for Financial Reform, a newly created umbrella organization of some 250 consumer, labor, civil rights and other activist organizations.On September 17, 2010, President Barack Obama announced the appointment of Warren as Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau to set up the new agency. Due to the way the legislation creating the bureau was written, until the first director was in place, the agency was not able to write new rules or supervise financial institutions other than banks.
File:Nomination of Richard Cordray.jpg|thumb|President Barack Obama announces the nomination of Richard Cordray as the first director of the CFPB on July 18, 2011.
Elizabeth Warren, who proposed and established the CFPB, was removed from consideration as the bureau's first formal director after Obama administration officials became convinced Warren could not overcome strong Republican opposition. On July 17, Obama nominated former Ohio attorney general and Ohio state treasurer Richard Cordray to be the first formal director of the CFPB. Prior to his nomination, Cordray had been hired as chief of enforcement for the agency.
However, Cordray's nomination was immediately in jeopardy due to 44 Senate Republicans vowing to derail any nominee in order to encourage a decentralized structure of the organization. Senate Republicans had also shown a pattern of refusing to consider regulatory agency nominees.
The CFPB formally began operation on July 21, 2011.
Since the CFPB database was established in 2011, more than four million complaints have been published. CFPB supporters include the Consumers Union claim that it is a "vital tool that can help consumers make informed decisions". CFPB detractors argue that the CFPB database is a "gotcha game" and that there is already a database maintained by the Federal Trade Commission although that information is not available to the public.
On January 4, 2012, Barack Obama issued a recess appointment to install Cordray as director through the end of 2013. This was a highly controversial move as the Senate was still holding pro forma sessions, and the possibility existed that the appointment could be challenged in court. This type of recess appointment was unanimously ruled unconstitutional in NLRB v. Noel Canning.
On July 16, 2013, the Senate confirmed Cordray as director in a 66–34 vote. Cordray resigned in late 2017 to run for governor of Ohio.
The Financial CHOICE Act, proposed by the House Financial Services Committee's Jeb Hensarling, to repeal the Dodd–Frank Wall Street Reform and Consumer Protection Act, passed the House on June 8, 2017. Also in June 2017, the Senate was crafting its own reform bill.
Testimony in US Congressional hearings of 2017 have elicited concerns that the wholesale publication of consumer complaints is both misleading and injurious to the consumer market. Rep. Barry Loudermilk said at one such congressional hearing, "Is the purpose of the database just to name and shame companies? Or should they have a disclaimer on there that says it's a fact-free zone, or this is fake news? That's really what I see happening here." Bill Himpler, executive vice president of the American Financial Services Association, a trade group representing banks and other lenders responded "Something needs to be done." "Once the damage is done to a company, it's hard to get your reputation back.
Mick Mulvaney, as acting director of the CFPB, removed all 25 members of the agency's Consumer Advisory Board on June 5, 2018, after eleven of them held a press conference on June 3 in which they criticized him.
On February 13, 2021, President Joe Biden formally submitted to the Senate the nomination of Rohit Chopra to serve as director of the CFPB. His nomination was approved on September 30, 2021, by a 50–48 vote.
In December 2021, CFPB fined LendUp $100,000 due to deceptive marketing and fair lending violations, and the company was required to stop issuing new loans.
In June 2024, the CFPB proposed banning using medical debt in credit reports or loan decisions. In July 2024, the CFPB gave Zelle a choice between a settlement or litigation around its handling of fraud and scams on its platform.
Second Trump administration
On February 1, 2025, Chopra was fired by President Donald Trump, making deputy director Zixta Martinez the acting director of the agency by operation of law. On February 3, Trump named Treasury Secretary and former hedge fund manager Scott Bessent as the agency's acting director. Bessent immediately ordered the agency to halt all work. On February 7, Office of Management and Budget Director Russell Vought emailed CFPB staff to let them know he was the acting director of the agency. On February 10, Vought ordered all CFPB staff to cease all work between February 10 and 14, and closed the CFPB Washington headquarters.In February 2025, the bureau became a target of the Department of Government Efficiency, the Elon Musk-led team carrying out part of Trump's cost-cutting agenda. Staffers gained access to consumers' data. As of February 14, 2025, the agency's website homepage displays a 404 error, however other pages on the site remain active. All content from the agency's social media accounts have been removed. CFPB workers have accused Musk of having a conflict of interest, as the agency was investigating several of his companies. "A public database shows hundreds of complaints about the electric car company Tesla, mostly concerning debt collection or loan problems," states the New York Times. Helaine Olen, from the American Economic Liberties Project, argues that closing down the CFPB "is an overt power grab by Big Tech — and their gain could result in the rest of us losing much more than almost anyone realizes."
On February 11, 2025, Vought restored the CFPB procedures that sustain the mortgage markets.
On February 14, 2025, a judge of the Federal District Court in Washington ordered officials at the CFPB not to “delete, destroy, remove or impair any data” or fire employees en masse. Immediately afterward, the agency's remaining employees were put on administrative leave until otherwise instructed.
In May 2025, the CFPB cancelled implementation of its proposed rules to regulate data brokers' collection of Americans' sensitive personal information.