What is the Consumer Financial Protection Bureau?
The Consumer Financial Protection Bureau is a government agency that is tasked with the job of protecting Americans when they make deals with services such as mortgage, credit cards among others. The objective is to educate the people signing the loans and make sure they are signing without tricks or traps. This agency also investigates the financial firms that break the law.
A Little More on Consumer Financial Protection Board
A while ago, numerous individual agencies supervised banks and other financial services providers that were used by consumers, but no agency was tasked with protecting the public from unfair or deceptive practices. The CFPB was then created and then tasked with this mandate. This bureau was established in 2011, one year after the Dodd act was enacted. The best thing about this Dodd-Frank Act is that it gave CFPB independence. It ensured that although the CFPB is part of the Federal Reserve System, it was structured to be almost independent and headed by a director designated by the president and confirmed by the Senate. However, much supervision has been built into the system to make sure that the CFPB manages to work in tandem with other government regulatory agencies. The law allows the financing of the CFPB by the Federal Reserve, and this makes it very difficult for the politicians to interfere or politicize the bureau. This bureau creates educational tools, answers common questions and also provides consumers with tips to help them navigate their financial choices and chose the deal that they see fit. It also takes legal action against the companies and practices that are against the law, and it has repatriated billions of dollars back to harmed customers. It encourages financial education and capability from childhood to retirement and educates the financial companies about their responsibilities. The main reason for forming the CFPB was to provide a single point of accountability for enforcing federal consumer financial laws and protecting consumers in the financial market place. Some of the functions carried out by this bureau include:
- Rooting out unfair, deceptive or abusive practices by creating rules, supervising companies and enforcing the law.
- Enforcing laws that reduce discrimination in consumer finance.
- Taking complaints from consumers
- Enhancing financial education among citizens
- Investigating consumer experience resulting from using financial products
- Monitoring financial markets to scope for new risks to consumers
