Consumer Financial Protection Bureau (CFPB)

Updated November 4, 2020

What Is the CFPB?

Created by President Obama’s Administration in 2010, the Consumer Financial Protection Bureau (CFPB) serves as a federal watchdog over the consumer financial industry.

Responsible for regulating financial services companies in the credit card and mortgage industry as well as other financial services products, the CFPB guides policy and enforcement in order to protect consumers from fraud and abuse.

How the CFPB Works

The CFPB is charged with policy making, supervision, and enforcement of federal consumer financial protection laws as well as identifying and preventing unfair, deceptive, or abusive practices against consumers in the financial services space.

The CFPB acknowledges consumer complaints, conducts consumer behavior research, and monitors financial markets, trends, and products to identify potential risks to consumers.The Bureau uses this data to guide the creation of regulations that impact the ever changing financial landscape in the U.S.

The CFPB also creates educational programs and awareness in order to empower consumers to make more informed financial decisions.

The Goals of the CFPB

The CFPB is the only primarily consumer-focused regulating authority. The Bureau keeps a regulatory eye on the large banks and credit unions that were historically regulated by several arms of the federal government alongside privately-owned “non-bank financial institutions.”

It aims to regulate the activities of independent payday lenders, private mortgage lenders and servicers, debt collectors, credit reporting agencies, and private student loan companies.

History of the CFPB

In the wake of the Financial Crisis of 2008 and subsequent Great Recession, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010. Signed into law by President Barack Obama, Dodd-Frank created the Consumer Financial Protection Bureau. The Bureau’s first director was Elizabeth Warren, who went on to become a U.S. Senator from Massachusetts. 

The CFPB has faced criticism and controversy from the start, largely for the unique way it is structured. The CFPB Director may only be fired by the President for cause, and the Bureau receives funding directly from the Federal Reserve so that they do not need to rely on Congress for funding. While some say this promotes an intentional independence, others complain about a lack of accountability and oversight for such a powerful agency. 

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Mark Herman has been helping friends with financial questions since serving as an Army helicopter pilot. Since then, he’s gained valuable experience in the corporate world before moving on to become a Certified Financial Planner™.

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