FACTBOX-New US consumer financial bureau has wide powers

September 14, 2010

Sept 14 (Reuters) – President Barack Obama is expected soon to pick the director of a new U.S. Consumer Financial Protection Bureau that will regulate mortgages, credit cards and other financial goods and services.

Congress created the bureau in response to widespread deception and abuse of borrowers during the credit bubble that burst two years ago, triggering a global financial crisis.

Here is a profile of the new watchdog unit, called for under Wall Street reforms that were written into law in July.


The bureau will write and enforce rules for banks and other firms, aiming to protect consumers from deceptive and abusive loans and other financial products and services.

It will be able to conduct examinations of banks and seek information from other firms about consumer-related business.

It will monitor and report on markets for consumer financial goods and services, ranging from payday loans to check cashing shops, and how consumers interact with them.

It will collect and track consumer complaints about these markets through a toll-free telephone number and a website.

In doing its work, the bureau will consolidate existing consumer protection programs now scattered across several agencies widely criticized for doing a poor job in the past.


The bureau will be an independent unit located inside and funded by the Federal Reserve, the country’s central bank. The financial reform law allows the agency to be formed on an interim basis within the U.S. Treasury.

The director must be nominated by the president and confirmed by the Senate to a five-year term.

The bureau will have offices that are in charge of fair lending, financial education, armed services affairs, and financial protection for older Americans, among others.


The Financial Stability Oversight Council, an inter-agency group of regulators also set up under the new reforms, will have some power to block new regulations from the bureau.

A six-member board of experts from consumer protection, financial services and other fields — appointed on recommendation from the regional Federal Reserve Bank presidents — will advise the director.


The bureau’s authority will extend over banks, credit unions, mortgage brokers and servicers, foreclosure relief services, credit card issuers and many other businesses.


Car dealers that sell, service and lease vehicles are largely exempt from bureau oversight, except in cases where they cross the line into extending retail credit that is not routinely assigned to a third party financing source.

Other businesses exempt from the bureau’s reach — as long as their activities don’t drift into consumer financial goods and services — include merchants and retailers, real estate brokers, manufactured and modular home retailers, accountants and tax preparers, and lawyers.

Insurers remain regulated by the states.

Stockbrokers and other investment securities firms remain regulated by the Securities and Exchange Commission and the Commodity Futures Trading Commission.

(Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn) ((kevin.drawbaugh@thomsonreuters.com, +1 202 898 8390, +1 202 488 3459 (fax)))

One comment

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Listen, it’s a good thing that payday lenders, banks and creditors are starting to be regulated, but I don’t think it’s right that politicians are telling us what is financially healthy or unhealthy in our own lives. I think you need to give people all the information they need and allow them to make their own informed decisions. I think I am smart enough to read the paperwork and figure out my best option!

Posted by belingrif | Report as abusive

[…] Auch Reuters Blogs beleuchten, ob es sich um einen Papier- oder Säbelzahntiger (der leider ebenso ausgestorben ist) handelt. Und die FTD proklamiert: „Der Sheriff für die Wall Street ist eine Frau“. […]

Posted by Consumer Protection Agency: USA und der schleichende Bewusstseinswandel zum mündigen Bankkunden « Social Banking 2.0 – Der Kunde übernimmt die Regie | Report as abusive