Effects of the Consumer Financial Protection Bureau on financial companies
May 20, 2011 Brian Bradley
The Consumer Financial Protection Bureau, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act and will officially launch on July 21, is set to provide stronger enforcement of the federal laws and regulations governing consumer protection in the U.S. It is important for credit card and mortgage companies, debt collection agencies and other consumer financial product and service providers to stay abreast of the changes that will be introduced by the bureau in order to protect themselves. According to WalletPop, the bureau will set up a toll-free hotline in order to give consumers a way to voice their complaints with the agency, as well as submit formal reports about short term lending fees, credit card fees and more. Consumers will be able to file reports and complaints online at consumerfinance.gov, where they can also find information and tips about how to deal with various financial quandaries. In order to minimize and prevent what it deems as deceptive marketing and predatory lending, the bureau will also be monitoring the financial services marketplace and reviewing financial products in order to make sure that companies' actions are transparent, legal and fair. In its present form, it has the power to review everything from credit reports to high-cost loans. The CFPB will have the ability to enforce federal consumer financial laws such as the Fair Credit Reporting Act, and will also have the authority to penalize companies for failure to comply with these laws and/or step in to force financial institutions to improve their business practices. However, the pressure on financial companies may be alleviated before the CFPB makes its debut. Three bills recently passed in Congressional subcommittees would limit the bureau's ability to issue rules, and appoint a bipartisan committee to run it instead of a single director. A total of 44 U.S. Senators have signed a letter to President Obama which states that "no person should have the unfettered authority presently granted to the director of the Consumer Financial Protection Bureau" and they will not support any choice of a department head unless the bureau's power is reduced. "The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution," said Republican Alabama Senator Richard Shelby, who is on the Senate Banking Committee. "We should never entrust a single person with this much power and public money."