A User's Guide to the New Consumer Financial Protection Bureau


On Thursday, the Consumer Financial Protection Bureau officially opens its doors for business, under the leadership of Richard Cordray (pictured), who was appointed to the position last weekend by President Barack Obama.

Corday is the first official director of the new agency, though he still must face Congress confirmation hearings. He takes the administrative reigns from Elizabeth Warren, who spearheaded the development of the bureau over the past year, following its mandate under the Dodd-Frank Act. Warren heartily endorsed Cordray's nomination, writing in The Huffington Post this week: "[He] is smart, he is tough, and he will make a stellar director."

Even as the political fight continues over just how potent the agency will be, its simplest mission is to make clear the prices and risks of financial products and services, including credit cards and loans. The CFPB consolidates under one roof oversight of consumer issues, once spread across seven different federal agencies, and its 400-plus employees are taking action in these key areas:

1. Acting to protect consumers: The agency will examine the consumer practices of depository agencies with assets of $10 billion or more, including the $44 billion Navy Federal FCU, the $22 billion State Employees' Credit Union of North Carolina and the $15 billion Pentagon Federal FCU. Other credit unions will be subject to CFPB regulations. Enforcement will likely be through the National Credit Union Administration or state regulators.

Sponsored Links
2. Simplify mortgage disclosure forms: In May, the agency created the Know Before You Owe project to test alternative mortgage disclosure forms that will be given to consumers who have just applied for home loans. The bureau is also considering public input on the forms: To date, it has already received more than 13,000 responses through its website. The bureau expects to go through five rounds of evaluation and revision through September, and new forms and regulations will be issued by July 2012.

3. Clarify remittance policy and exchange rates: For the millions of Americans who send money to relatives overseas -- remittances -- the bureau will add more transparency regarding and exchange rates and the total price and fees charged by providers. The will also have to disclose up front how much money will be received on the foreign side of the funds transfer.

4. Examine nonbank companies for compliance with federal consumer financial laws: In a broad overhaul, the bureau will look after six nonbank markets that have not been subject to federal regulations until now, including debt collection, consumer reporting, consumer credit and related activities, check cashing and money transfers, prepaid cards and debt relief services. It has been authorized to examine all varieties of nonbank mortgage lenders, payday lenders and private education lenders, but only supervise other larger participants -- an arena which will be clearly defined no later than July 12, 2012.

5. Assist military families: The CFPB has special oversight responsibilities for servicemembers and military families through the Office of Servicemember Affairs, which directs education initiatives and other consumer protection measures.

6. Investigate variations in credit score reporting: Under new rules changes from the Federal Trade Commission and the Federal Reserve, banks and other lenders are required to show consumers the credit score and other information they used to make their credit-related decisions, such as interest rate offers and loan approval. The CFPB is responsible for enforcing the new rule, and has issued its first report on the variations between credit scores and reports from the consumer reporting agencies.

7. Listen with the Consumer Response Center: The bureau is opening a toll-free telephone number with English and Spanish language options for consumers to file and track complaints, along with a Web-based system for consumers to file credit card complaints.

Catherine New is a staff writer with DailyFinance.com. You can reach her here.