CFPB’s Annual Report Card

In his semi-annual Report to Congress and the President this week, CFPB Director Richard Cordray provided an overview of the bureau’s progress in protecting consumers from financial harm. So far, billions has been put back in consumers’ pockets and a slew of actions against banks and other firms has been taken. Yet, some lawmakers think it’s gone too far. Is it time for leadership structure and other changes in the bureau?

The Consumer Financial Protection Bureau, formed to help protect consumers in the financial marketplace, to date has aided in efforts to refund more than $3.8 billion to consumers who fell victim to various violations of consumer financial-protection laws, the bureau’s director testified before Congress this week.

Congress formed the bureau as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which passed in 2010 in response to a global financial disaster that soon led to the Great Recession. It often works closely with state regulators in coordinating enforcement actions. The Senate officially confirmed Richard Cordray as the bureau’s director last summer for a term that runs through 2018.

Condray’s appointment took time as lawmakers squabbled over the creation of the bureau. The bureau continues to butt heads with some lawmakers and banks, which feel the amount of information they must provide the agency is overly burdensome.

In April, U.S. Sen. Deb Fischer (R-Neb.) introduced two bills offering structural reforms to the bureau. The Consumer Financial Protection Commission Act of 2014 would replace the agency’s single director position with a five-member, bipartisan commission. Fischer’s second bill, The CFPB Improvement Act of 2014, would change the requirement for the Financial Stability Oversight Council’s voting members to overturn CFPB regulations.

The bureau also is in the middle of a House Financial Service subcommittee investigation into allegations of age and race discrimination and retaliation within the agency.

Despite the political plays in Congress, the bureau has shown effectiveness in meeting is goals.

In presenting the bureau’s fifth semi-annual report to Congress and the President, Cordray noted that it had fined wrongdoers more than $141 million. All such fines go into the bureau’s Civil Penalty Fund, which can be used to compensate wronged consumers and, to the extent compensating consumers is not practicable, pay for consumer education and financial literacy programs, he said.

In describing other recent activities, Condray noted that last fall the bureau, working in conjunction with multiple state attorneys general, too action against an online loan servicer for illegally collecting money that consumers did not owe.

“We took action against a payday lender for overcharging service members in violation of the Military Lending Act, and robo-signing court documents,” he added. “We took action against an auto lender for discriminatory loan pricing. And we partnered with 49 states in bringing an action against the nation’s largest nonbank mortgage loan servicer for misconduct at every stage of the mortgage servicing process.”

The bureau’s supervisory work contributed to a recent enforcement action against Bank of America resulting in a refund of approximately $727 million to 1.9 million consumers for illegal practices related to credit card add-on products, Cordray said. “In addition to this public enforcement action, recent nonpublic supervisory actions and self-reported violations have resulted in more than $70 million in remediation for over 775,000 consumers,” he added.

Capital One, Discover, American Express and JP Morgan Chase and Co have all previously settled with the consumer protection agency since the investigation into add-on products began in 2012.

Mortgage rules that the bureau issued to implement provisions of the Dodd-Frank Act took effect in January, establishing new protections for homebuyers and homeowners. During the reporting period, the bureau also issued another final mortgage rule to consolidate and improve federal mortgage disclosures under the Truth in Lending Act and the Real Estate Settlement Procedures Act, known as “Know Before You Owe.” It, too, was mandated by the Dodd-Frank Act.

The bureau also issued an advance notice of proposed rulemaking on debt collection, asking the public in-depth questions about a range of issues relating to the debt-collection market, which is the bureau’s most frequent source of consumer complaints, Cordray said in his testimony.

“To promote informed financial decision-making, we have continued providing consumers with online resources, including the ‘AskCFPB’ section of our website, where we have answers for over 1,000 frequently asked questions,” he said.

The bureau also strengthened its Office of Consumer Response. As of June 1, it had received nearly 375,000 consumer complaints on credit reporting, debt collection, money transfers, bank accounts and services, credit cards, mortgages, vehicle loans, payday loans, and student loans, Cordray said.

“The progress we have made has been possible thanks to the engagement of hundreds of thousands of Americans who have used our consumer-education tools, submitted complaints, participated in rulemakings, and told us their stories through our website and at numerous public meetings from coast to coast,” Cordray said.  “We have also benefited from an ongoing dialogue and constructive engagement with the institutions we supervise, as well as with community banks and credit unions, with whom we regularly meet.”