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Consumer Financial Protection Act Definition
The Consumer Financial Protection Act refers to the United States’ amendment act of 2010 to the National Bank Act. It was created to help identify and explain the national bank’s standards. It increases oversight as well as help in clarifying financial transactions’ governing laws, for the purpose of protecting consumers who engage in these financial transactions.
A Little More on What is the Consumer Financial Protection Act
Following the 2000 housing market collapse, part of the blame was placed on the lending practices. So, to ensure that there was a proper oversight in the financial lending process, the Consumer Financial Protection Act created the Consumer Financial Protection Bureau (CFPB) in 2011. Its work is to resolve the discrepancies in the financial laws between federal and state.
The CFPB centralizes all the services and financial products’ regulations of various financial institutions. It has the authority to supervise depository institutions with assets above $10 billion. Also, it powers to examine and enforce participants in the financial industry that offer financial products to consumers.
What CFPB basically does is to protect consumers from deceptive, unfair, or abusive practices, including acts that banks and other financial institutions practice. Also, note that Home Disclosure Act was transferred from the Federal Reserve to the Bureau makes data collection the responsibility of the lender. So, the CFPB ensures that the lender does not transfer this responsibility to the consumer.
What did the Consumer Financial Protection Bureau Accomplish?
In the first five years, after the CFPB’s establishment, aggressive actions were taken against the financial institutions. The agency, under the directorship of Richard Corday, was able to handle close to one million consumers’ complaints.
By implementing its enforcement actions, it was able to recover money worth $12 billion. The agency gave back the money to 27 million consumers. It also enacted new financial regulations, to help protect customers from deception. As per the act, the CFPB was also able to create a database. A channel that enabled consumers, to place their grievances about products and services from financial institutions.
Legal Actions that Apply to Consumer Financial Protection Act
Some examples of the legal actions that apply to consumer financial protection act include the following:
- Suing companies that deal with a credit card for either deceiving consumers or for unfair and abusive financial practices
- Prosecuting financial institutions for the overdraft fee they charge on consumers even though they did not consent to overdraft services
- Filing for a lawsuit against payday lending institutions
Elimination of the Consumer Financial Protection Bureau
There have been several attempts by the Republicans to abolish the consumer financial protection bureau. The move was so clear in the 2016 Republican Party Platform. The authors in this platform state that the CFPB agency is “rogue.” The reason behind there statement is that the director of the agency has dictatorial powers. Also, the actions of the agency happen to be unfair to regional and local banks, as the only banks that benefit are big banks.
In addition, the authors also feel that CFPB receives funding that is not within the appropriation process. It then directs such funds to groups that are politically favored. So, Republicans in the Senate and Congress have placed several proposed bills that will see the weakening of the CFPB agency. Among the things they want to challenge is the CGPB’s:
- Leadership structure
- Data collection process
President Donald Trump, in 2017, appointed Mick Mulvaney, who was then the head of the Management and Budget office, to be the interim director of the CFPB. Upon his appointment, Mulvaney influenced the following changes that greatly affected the CFPB operations:
- He refused to ask for CFPB funding
- He reconsidered resolutions made by Corday regarding payday lending
- He put on hold, the ongoing investigations, including that of the Equifax data breach.
- The Consumer Financial Protection Act refers to the United States’ amendment act of 2010 to the National Bank Act.
- Following the 2000 housing market collapse, part of the blame was placed on the lending practices. It led to the creation of the Consumer Financial Protection Bureau (CFPB) in 2011 to oversee lenders’ financial lending practices
- The CFPB centralizes all the services and financial products’ regulations of various financial institutions. It has the authority to supervise depository institutions with assets above $10 billion
- In the first five years, after the CFPB’s establishment, the agency was able to recover close to $1 million, which was given back to 27 million consumers