The Consumer Financial Protection Bureau (CFPB), the first and only government agency with the sole avowed mission of protecting consumers in the financial marketplace, has received an excess of attention in its first year of existence. With the economy front and center as the most important issue in the upcoming elections, Members of Congress remain focused on ways to create jobs and foster small business growth while at the same time protecting consumers in the wake of the 2007 financial crisis, which lead to the passage of the Dodd-Frank Wall Street Reform Act (Dodd-Frank) and the creation of the CFPB.
On Wednesday, August 1st, the House Committee on Small Business held a hearing to examine CFPB’s impact on small businesses and compliance with the Regulatory Flexibility Act (RFA), which requires federal agencies to evaluate the impacts of regulations on small businesses and, if significant, consider less-burdensome alternatives. The hearing, entitled, “Know Before You Regulate: The Impact of CFPB Regulations on Small Business,” featured CFPB Director Richard Cordray as the sole witness. Discussion focused on possible unintended consequences of the CFPB’s regulatory process on small business, CFPB’s compliance with RFA, and ways the Bureau has reached out to seek input from the small business community. The Small Business Committee hearing comes after the House Financial Services Committee spent the month of July marking the two-year anniversary of Dodd-Frank by holding hearings on the law, including a number focused in particular on the CFPB.
On another front, the CFPB recently released their semi-annual report to the President and Congress, detailing their activities from January 1st to June 30th of this year. The report, required under Dodd-Frank, outlines the agency’s proposed regulations, enforcement actions, as well as consumer complaints received by the agency and how they are handling those complaints. The CFPB, through its Consumer Complaints Database, began taking complaints about bank products, credit cards, student loans and mortgages on March 1st of this year. The agency reports that, between July 21st, 2011, and June 30th, 2012, they received approximately 55,300 consumer complaints. The largest portion of those, 43%, were related to mortgages, with 34% related to credit cards; 15% bank accounts; 4% student loans; and 2% other consumer loans. The report also discusses progress in building the agency itself, stating that CFPB has spent $247 million so far in fiscal year 2012 and that their staff grew from 750 employees in December 2011 to 889 as of June 30, 2012.
On enforcement, the CFPB report provides little detail on what investigations are currently underway but states that they “span the full breadth of the Bureau’s enforcement jurisdiction” and that more details will be made available once public enforcement actions are filed. The agency’s first public announcement of an enforcement action was made just a few weeks ago, on July 18th, against Capital One Bank. The agency ordered Capital One to refund approximately $140 million to two million customers and pay a $25 million penalty related to charges that the company engaged in deceptive tactics to sell consumer products.
Focus on the agency is sure to continue into the next Congress as the CFPB will continue to expand their efforts over the next few months. Republican Members remain concerned over additional regulations inhibiting job growth and economic recovery. While Democrats as well are wary about possible effects the agency’s increased regulation of consumer products will have on access to loans for their constituents.