By now, most American consumers have heard of the Consumer Financial Protection Bureau. But what exactly is it, what does it do and why was it formed? Because it’s in the news again, we thought it’d be a good time to take a look at the bureau and its leader, as well as its success, especially considering it’s only two years old.
In late 2007, just before the collective country realized we were headed into an unstoppable recession. Within months, massive job losses began, financing options for small businesses were all but non-existent, improper mortgages were being uncovered and banking giants began falling in droves.
What was left was a country that had no idea what happened. Soon, questions were being asked that should’ve been asked before signing on the dotted line, but it was too little too late. Even those who did understand the intricacies of their financial lives found their home values drop because of the massive foreclosures going on that were affecting neighborhoods everywhere. Those who used credit cards and home equity lines of credit watched as their interest rates climbed and many were helpless when it came to seeing their retirement funds lose value.
By the summer of 2009, President Obama was making efforts to address what his administration believed was the failure of the financial sector as a whole to protect consumers. The CFPB was born. The goal was to heighten government accountability, partly by eliminating so many agencies and instead, form a streamlined agency with transparent policies and the goal of protecting consumers.
The focus would be on those consumers, with less effort of protecting big banks and monetary policies many believed were to blame for the mess the nation was in. President Obama insisted this new agency have a budget that would allow it to do its job and the independence to work with few restrictions to
ensure powerful financial companies would comply with consumer laws.
Within a year, Congress passed and President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act created the Consumer Financial Protection Bureau (CFPB), which now consolidates most Federal consumer financial protection authority in one place. The consumer bureau is focused on one goal: watching out for American consumers in the market for consumer financial products and services. It’s been more than successful in its efforts, too. Recently, it put into place a database for consumers to report unethical or illegal behavior by their credit card companies, which CFPB then investigates.
Richard Cordray was given the role of the agency’s Director of Consumer Financial Protection Bureau. Named by President Obama, the former Ohio Attorney General has an impressive background and is perhaps best known for his successful recovery of more than $2 billion for Ohio’s retirees, investors and business owners. He put into place major changes to protect Ohio consumers from fraudulent foreclosures and financial predators. For his efforts, he was presented with the Better Business Bureau’s award for promoting an ethical marketplace. He remains a well respected leader in Ohio and now, across the U.S.
Still in its infancy, the CFPB has emerged as a powerful consumer watchdog and has put into place countless new acts designed to protect consumers. It will soon put into place a database, similar to the credit card reporting database, for student loans and unfair or unethical tactics in collecting those debts.