Transcript Slide 1

Dodd-Frank Wall Street Reform
and Consumer Protection Act of
2010 – Title X - Consumer
Financial Protection Bureau
August 2010
Subtitle A – Bureau of Consumer
Financial Protection
•Becomes
effective on enactment date (July
21, 2010).
2
Establishment of Bureau of
Consumer Financial Protection (sec.
1011)
◦ Bureau within the Federal Reserve.
◦ Led by Presidentially-appointed, Senate-confirmed
Director.
◦ Fed may not intervene in any matter before the
CFPB.
◦ Fed does not have approval or review authority,
cannot delay or prevent issuance of any rule.
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Enumerated Statutes (sec. 1002)
CFPB to implement Federal consumer financial laws, including:
 Alternative Mortgage Transaction Parity Act of 1982
 Consumer Leasing Act of 1976
 Electronic Fund Transfer Act (except sec. 920)
 Equal Credit Opportunity Act
 Fair Credit Reporting Act (except sec. 615(e) and 628)
 Home Owners Protection Act of 1998
 Fair Debt Collection Practices Act
 Federal Deposit Insurance Act (sec. 43,subsections b-f)
 Gramm-Leach-Bliley Act (sec. 502-509, except sec 505 as it applies to sec.
501(b)
 Home Mortgage Disclosure Act of 1975
 Home Ownership and Equity Protection Act of 1994
 Real Estate Settlement Procedures Act of 1974
 S.A.F.E. Mortgage Licensing Act of 2008
 Truth in Lending Act
 Truth in Savings Act
 Omnibus Appropriations Act, sec. 626
 Interstate Land Sales Full Disclosure Act
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Definition of Covered Person (sec.
1002)

CFPB’s jurisdiction covers a broad array of transactions
related to the sales and marketing of credit, deposit and
payment products and services, including:
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Loan brokering and servicing
Deposit-taking
Real estate settlement services
Stored value or payment services
Check cashing
Remittances
Debt management and collection
Credit reporting
CFPB will not have jurisdiction over:
◦ securities and commodities activities regulated by the SEC or
CFTC or
◦ insurance regulated by the states.
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Functional Units – Research (sec.
1013)

CFPB will research, analyze and report on◦ Developments in markets for consumer financial products or
services including market areas of alternative products/services
with high growth rates and areas of risk to consumers;
◦ Access to fair and affordable credit for traditionally underserved
communities ;
◦ Consumer awareness, understanding and use of disclosures and
communications;
◦ Consumer awareness and understanding of costs, risks and
benefits of products or services;
◦ Consumer behavior with respect to consumer financial
products/services, including performance on mortgage loans;
◦ Experiences of traditionally underserved consumers, including unbanked and under-banked.
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Functional Units –Community
Affairs (sec. 1013)

Provide information, guidance and technical
assistance to traditionally underserved
consumers and communities
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Functional Units – Collecting and
Tracking Complaints
(sec. 1013)
Establish a single, toll-free number, website and
database to facilitate centralized collection of,
monitoring of, and response to consumer
complaints;
 Coordinate with FTC, other federal agencies to
route calls;
 Route calls to states if practicable;
 Annual report to Congress no later than 3/31 with
complaint numbers, types and resolution of
complaints where applicable.
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Office of Fair Lending and Equal
Opportunity (sec. 1013) (established not later
than 1 year after designated transfer date)
Oversight/enforcement of federal laws to ensure fair,
equitable and nondiscriminatory access to credit,
including Equal Credit Opportunity Act and Home
Mortgage Disclosure Act;
 Coordinate fair lending efforts with other agencies and
state regulators to promote consistent, efficient and
effective enforcement of Federal fair lending laws;
 Work with private industry, fair lending, civil rights,
consumer and community advocates on promotion of
fair lending compliance and education.
 Annual report to Congress
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Office of Financial Education
(sec. 1013) (established not later than 1 year after designated transfer
date)
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Develop and implement initiatives to educate and empower
consumers to make better informed financial decisions.
Develop and implement a strategy to improve consumer financial
literacy that includes measurable goals and objectives, in consultation
with the Financial Literacy and Education Commission, through
activities including providing opportunities for consumer to access:
◦ Financial counseling
◦ Information to assist with evaluation of credit products and the
understanding of credit histories and scores
◦ Savings, borrowing and other services at mainstream financial institutions
◦ Prepare consumer for educational expenses/financial aid applications and
other major purchases, reduce debt, improve the financial situation of the
consumer
◦ Develop long-term savings strategies
◦ Wealth-building and financial services to claim EITC and federal benefits.

Report to House and Senate Committees after 2 years, then annually.
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Office of Service Member Affairs
(sec. 1013) (established not later than 1 year after designated transfer
date)
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Develops and implements initiatives for service
members and their families intended to:
◦ Educate and empower service members and their
families to make better informed decisions
◦ Coordinate with complaint unit to monitor service
member complaints and responses to complaints
◦ Coordinate efforts among federal and state agencies, as
appropriate, regarding consumer protection measures
offered to or used by service members and their
families.
◦ May establish and maintain regional offices near military
bases
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Office of Financial Protection for Older
Americans (sec. 1013) (established before end of 180-day
period after designated transfer date)

Facilitate financial literacy of age 62+ on protection from unfair, deceptive, abusive
practices and current and future financial choices, including through dissemination
of materials;
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Develop goals for senior financial literacy and counseling programs including
programs that help seniors recognize warning signs of unfair, deceptive or abusive
practices; provide 1-on-1 financial counseling on issues including long-term savings
and later-life economic security; and provide consumer credit advocacy to
respond to consumer problems caused by unfair, deceptive or abusive practices;
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Monitor certifications/designations of financial advisors, alert the SEC and state
regulators of certifications/designations identified as unfair, deceptive or abusive;
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Submit legislative/regulatory recommendations to Congress on best practices for
disseminating information on legitimacy of certifications of financial advisers who
advise seniors, methods a senior can use to identify the financial adviser most
appropriate for their needs, and to verify a financial adviser’s credentials;
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Office of Financial Protection for Older
Americans, continued (sec. 1013) (established before
end of 180-day period after designated transfer date)
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Conduct research to identify best practices and effective methods, tools,
technology and strategies to educate and counsel seniors about personal finance
management with a focus on protection from unfair, deceptive and abusive
practices, long-term savings, and planning for retirement and long-term care;
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Coordinate consumer protection efforts of seniors with other Federal agencies
and state regulators to promote consistent, effective, and efficient enforcement,
and
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Work with community and non-profit organizations and other entities involved
with educating or assisting seniors (including the National Education and Resource
Center on Women and Retirement Planning).
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Consumer Advisory Board
(sec. 1014)
Advise and consult with the CFPB in the
exercise of its functions under the Federal
consumer financial laws and to provide
information on emerging practices in the
consumer financial products or services
industry, including regional trends, concerns,
and other relevant information.
 Experts in consumer protection, financial
services, community development, fair lending
and consumer financial products/services.
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CFPB Funding (sec. 1017)

Fed will transfer no more than
◦ 10% of total operating expenses in FY 2011,
◦ 11% in FY 2012,
◦ 12% in FY 2013 and each year thereafter
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Amount will be adjusted annually based on inflation.
Funds are not subject to review by House or Senate
Appropriations Committees
Transition Period – beginning on enactment date and until
designated transfer date, Fed shall transfer the amount estimated
by the Secretary needed to carry out the authorities granted to
CFPB
If CFPB Director determines more funds are needed, Director shall
submit report to President and House and Senate Appropriations
Committees
If Director submits above report, CFPB will receive $200,000,000
for each FY 2010, 2011, 2012, 2013, and 2014
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Consumer Financial Civil Penalty
Fund (sec. 1017)
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Maintained and established at a Federal
Reserve Bank. If CFPB obtains a civil penalty
against any person CFPB shall deposit the
amount of penalty collected into the Civil
Penalty Fund
Amounts in the Civil Penalty Fund shall be
available to the CFPB for payments to
victims. If victims can’t be located, CFPB
shall use funds for consumer education and
consumer literacy.
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Subtitle B – General Powers of the
Bureau
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Becomes effective on designated transfer
date except where noted.
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CFPB Powers (sec 1021)
Purpose – implement and, where applicable, enforce federal
consumer financial law to ensure that all consumers have
access to product and services and that markets are fair,
transparent, and competitive.
 Objectives 
◦ Consumers provided with timely and understandable
information to make responsible decisions ;
◦ Consumers are protected from unfair, deceptive, or abusive
acts/practices and from discrimination;
◦ Outdated, unnecessary or unduly burdensome regulations are
regularly identified to reduce unwarranted regulatory burdens;
◦ Federal consumer law is enforced consistently to promote fair
competition;
◦ Markets operate transparently and efficiently to facilitate access
and innovation.
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CFPB Functions (sec. 1021)
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Conducting financial education programs;
Collecting, investigating, and responding to consumer
complaints;
Collecting researching, monitoring and publishing
information relevant to functioning of markets to
identify risks to consumers and the proper
functioning of such markets;
Supervising covered persons for compliance with
Federal consumer financial law, and taking appropriate
enforcement action to address violations;
Issuing rules, orders, and guidance implementing
Federal consumer financial law; and
Performing such support activities as necessary or
useful to facilitate the other functions of the Bureau.
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“Plain Vanilla” Products and Services
House version of the bill prohibited the
CFPB from requiring the offering of
standard or “plain vanilla” products or
services.
 This provision is not in the final bill,
meaning that the CFPB could require
entities to offer “plain vanilla” products.
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20
Rulemaking Standards and Monitoring
(sec. 1022) (becomes effective on date of enactment
- July 21, 2010)

Standards for Rulemaking CFPB must consider:
◦ When developing rules, CFPB must consider potential benefits and costs to
consumers and industry; impact on small banks and rural consumers.
To support rulemaking and other functions, CFPB shall monitor for risks to
consumers, including market developments for products and services
 In allocating resources for monitoring, CFPB may consider 
◦ likely risks /costs to consumers associated with buying/using a type of financial
product/service;
◦ Consumer understanding of risks of a type of product/service;
◦ Legal protections applicable to offering /providing a product/service, including extent
to which the law is likely to adequately protect consumers;
◦ Rates of growth in offering /providing product/service
◦ Extent, if any, that risks of financial product or service may disproportionately affect
traditionally underserved customers ;or
◦ Types, number and other pertinent characteristics of entities that offer or provide the
product or service.

CFPB must publish annual report of significant findings
21
Council Veto of CFPB Rules
(sec. 1023)
On petition of member agency of the Financial Stability
Oversight Council, the Council may set aside a final CFPB
regulation if Council decides that the regulation/provision
would put safety and soundness of U.S. banking system or
stability of financial system at risk.
 Council: Treasury Secretary, Fed Chair, Comptroller of
Currency, CFPB Director, SEC Chair, FDIC Chair, CFTC
Chair, FHFA Director, NCUA Board Chair, independent
member with insurance expertise.
 Need 2/3 vote of the Council to issue a stay or set aside a
regulation.
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Supervision of Non-banks (sec. 1024)
(becomes effective on date of enactment-July 21, 2010)

Covers:
◦ Mortgage lenders, loan modification and foreclosure relief services or
◦ “Larger” participant of a market for other consumer financial
products/services, to be defined by CFPB in consultation with FTC.

Entity is engaging/has engaged in conduct that poses risks to consumers in
the offering/provision of consumer financial product/service, based on
complaints/ information from other sources;
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Offers or provides private education loans;
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Offers or provides a payday loan.
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Initial rule defining “larger” participate to be issued not later than 1 year after
designated transfer date.
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CFPB will require reports/conduct examinations on these entities to:
◦ Assess compliance with federal consumer finance law;
◦ Obtain information about activities and compliance systems or
procedures; and
◦ Detect and assess risks to consumers and markets .
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CFPB Non-bank Risk-Based
Supervision (sec. 1024) (becomes effective on
date of enactment - July 21, 2010)

CFPB will exercise its authority based on risks
posed to consumers in the relevant product
and geographic markets, taking into
consideration:
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Asset size
Volume of transactions
Risks to consumers
Extent institutions are overseen by state authorities
Anything else CFPB deems relevant
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CFPB Non-bank Supervision/
Coordination (sec. 1024) (becomes effective on
date of enactment - July 21, 2010)
Coordinate supervision and examinations
with activities of prudential regulators and
state bank regulatory agencies.
 CFPB will use reports that have been
provided to a federal or state agency to the
greatest extent possible.
 CFPB will write rules on registration
requirements for non-banks.
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CFPB Non-Bank Enforcement (sec.
1024) (becomes effective on date of enactment
- July 21, 2010)
CFPB has exclusive authority to enforce
federal consumer financial laws that
authorize the CFPB and another agency to
provide enforcement.
 CFPB and FTC will negotiate an agreement
for coordinating enforcement actions
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CFPB Non-Bank Rulemaking and
Examination Authority
(sec. 1024) (becomes effective on date of
enactment - July 21, 2010)

CFPB has exclusive authority to prescribe
rules, issue guidance, conduct examinations,
require reports, or issue exemptions for
non-banks to the extent that federal law
authorizes the CFPB and another federal
agency to take these actions.
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CFPB Supervision of Very Large Banks,
Savings Associations, Credit Unions (sec
1025)
Covers insured banks and credit unions with total
assets of >$10 billion.
 CFPB will have authority to require reports and
conduct examinations for purposes of:

◦ Assessing compliance with federal consumer laws
◦ Obtaining info about activities and compliance systems
◦ Detecting and assessing risks to consumers and to markets
for consumer financial products/services

CFPB will coordinate supervisory activities with
prudential and state bank regulators including
consultation on respective examination schedules and
reporting requirements – this provision is effective on
date of enactment (July 21, 2010).
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CFPB Supervision of Very Large Banks,
Savings Associations, Credit Unions
(sec 1025) (continued)
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CFPB has primary enforcement authority for
Federal consumer financial law to the extent
that the CFPB and another Federal agency
are authorized to enforce a Federal
consumer financial law.
Any Federal agency that is authorized to
enforce a Federal consumer financial law
(except the FTC) can recommend that the
CFPB initiate an enforcement proceeding.
If CFPB does not initiate enforcement
proceeding within 120 days, the agency may
initiate an enforcement proceeding.
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CFPB Coverage of Smaller Banks
(sec 1026)
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Covers insured banks and credit unions with assets < $10 billion.
CFPB, to fullest extent possible, will use reports that have been
provided to a federal/state agency and information that has been
reported publicly.
CFPB can include examiners on sampling basis of examinations
performed by prudential regulator.
Prudential regulator must provide all reports, records, documentation
included in the sample to the CFPB, involve CFPB examiner in entire
process, consider CFPB input .
Prudential regulator will have exclusive authority to enforce
compliance.
CFPB must notify prudential regulator if it has reason to believe that a
smaller bank or credit union has engaged in a material violation of a
federal consumer financial law and recommend appropriate action.
Prudential regulator must provide written response to CFPB within 60
days.
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Limitations on Authorities of
CFPB (sec. 1027)

No CFPB authority over;
◦ Merchants, retailers, sellers of non-financial
goods/services and merchant is engaged in
sale/brokerage of nonfinancial good /service. Exception
for merchant engaged in offering /providing any
consumer financial product/service or merchant is
otherwise subject to any enumerated consumer law.
◦ Merchant that extends credit directly to a consumer,
but the good/service is not a consumer financial
product/service, exclusively for enabling consumer to
purchase goods/services from merchant.
◦ Debt collection directly or through an agreement with
another person by the merchant or merchant
sells/conveys debt that is delinquent or otherwise in
default.
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Exemptions from CFPB
(sec 1027)
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Merchants are excluded if they offer credit solely
for the purpose of enabling a consumer to
purchase a nonfinancial good or service.
Merchants are covered if, when they extend
credit, it is:
◦ Sold or conveyed to another person,
◦ Significantly exceeds the market value of the good or
service, or
◦ Is subject to a finance charge.

If merchant’s offered credit just includes a finance
charge, then the merchant is excluded so long as
s/he is not engaged significantly in offering
consumer financial products or services.
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Limitations on Authorities of
CFPB (sec. 1027)

Small Businesses
◦ Merchant that extends credit and credit is subject to a
finance charge not covered if  Only extends credit for the sale of nonfinancial goods/services;
 Retains such credit on own accounts (except to sell or convey
such debt that is delinquent or otherwise in default); and
 Meets the relevant industry size threshold to be a small
business, based on annual receipts under SBA Act.
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Exemptions from CFPB
(sec 1027)
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Exclusion for:
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real estate brokers/agents,
manufactured and mobile home retailers,
accountants and tax preparers,
lawyers,
persons regulated by state insurance regulator or
state securities commission,
◦ employee benefit and compensation plans,
◦ charitable contributions unless engaged in the
offering or provision of any consumer financial
product/service or subject to another consumer
law
34
Usury (sec. 1027)

No authority for CFPB to impose usury
limit.
35
Exclusions for Auto Dealer-Lenders
(sec. 1029)
No rulemaking, supervisory, enforcement or any other
authority over auto dealer that is primarily engaged in
sale and servicing of autos, including motorcycles, boats,
motor homes.
 FTC given the authority to write rules under the
Administrative Procedures Act on auto dealer-lenders.
 Federal Reserve and FTC must coordinate with Office
of Service Member Affairs to ensure that 
◦ Service members and their families are educated/ empowered
to make better decisions regarding consumer financial
products/services offered by auto dealers; and
◦ Service member complaints are effectively monitored and
responded to, and where appropriate, enforcement action is
pursued by authorized agencies.
36
Mandatory Arbitration (sec . 1028)
CFPB to conduct study/report to Congress
on use of pre-dispute arbitration agreements
 CFPB, by regulation, may prohibit or impose
conditions/limitations on use of mandatory
pre-dispute arbitration if it is in the public
interest and protects consumers. Findings in
rule must be consistent with the study.
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37
Subtitle C – Specific Bureau
Authorities

Takes effect on designated transfer date.
38
Prohibiting Unfair, Deceptive, Abusive
Acts/Practices (sec. 1031)

CFPB:
◦ authorized to take action to prevent unfair, deceptive or abusive act or practice;
◦ may write rules identifying as unlawful, unfair, deceptive, or abusive acts/practices.

Unfairness –
◦ Act or practice causes/likely to cause substantial injury which is not reasonably
avoidable;
◦ Substantial injury not outweighed by countervailing benefits to consumers or
competition;
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Abusive –
◦ Materially interferes with ability of a consumer to understand a term/condition of
product/service;
◦ Takes unreasonable advantage of  lack of understanding of risks, costs, conditions of product/service;
 Inability of consumer to protect the interests of the consumer in selecting/using
product/service;
 Reasonable reliance to act in the interests of the consumer.

CFPB will consult with banking and other agencies on consistency of proposed rule with
the prudential, market or systemic objectives of such agencies.
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Disclosures (sec. 1032)
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Regulations to ensure the features of any product/service, both initially and over the
term of the product/service, are fully, accurately, and effectively disclosed so that
consumers understand costs, benefits, and risks.

Final rule may include a model form to be used at the option of the lender.

Model form must contain clear and conspicuous disclosure that minimally,
◦ Uses plain language comprehensible to consumers;
◦ Contains a clear format and design, such as an easily readable type font;
◦ Succinctly explains the information that must be communicated.

Any model form must be validated through consumer testing.
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Any covered person that uses a model form included with a rule shall be deemed in
compliance with the disclosure requirements.
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Not less than 1 year after the designated transfer date, CFPB shall propose rules and
model disclosures for public comment that combine Truth in Lending and Real Estate
Settlement Procedures Act into a single, integrated disclosure for mortgage loan
transactions, unless CFPB determines the Fed and HUD have developed a form that
fulfills the same purpose.
40
Consumer Rights to Access
Information (sec. 1033)
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Subject to CFPB rules, a covered person is
required to make information available to a
consumer, upon the consumer’s request,
relating to any transaction, series of
transactions, or account costs, charges, and
usage data.
CFPB by rule shall prescribe standards
applicable to covered persons to promote
the development and use of standardized
formats for information to be made available
to consumers.
41
Response to Consumer
Complaints/Inquiries (sec. 1034)

CFPB will establish, in consultation with Federal
banking agencies and FTC, procedures to provide a
timely response to consumers, in writing where
appropriate, to complaints /inquiries concerning –
◦ Steps that have been taken in response to the complaint
or inquiry;
◦ Any responses received by the CFPB from the subject of
the complaint;
◦ Any follow-up actions or planned follow-up actions in
response to the complaint or inquiry.

Any subject of a complaint that is subject to CFPB
supervision and primary enforcement must provide
response to the CFPB, prudential regulator, and any
other agency with jurisdiction, concerning a
consumer complaint or inquiry.
42
Private Education Loan
Ombudsman (sec. 1035)

Establish Private Education Loan Ombudsman
to:
◦ Provide timely assistance to borrowers of private
education loans;
◦ Receive, review and attempt to resolve complaints
in collaboration with Dept. of Education;
◦ Compile and analyze data on borrower complaints.

Submit recommendations and annual report to
the CFPB, Dept of Education, and
Congressional committees of jurisdiction.
43
Prohibited Acts (sec. 1036)

Unlawful to:
◦ Offer or provide product/service not in
conformity with Federal consumer financial
law or commit act or omission in violation of
Federal consumer financial law.
◦ Engage in unfair, deceptive, abusive
act/practice.
44
Subtitle D – Preservation of State Law

Effective on designated transfer date.
45
Relation to State Law (sec. 1041)
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Must comply with laws, regulations, orders,
in effect in any state, except to the extent
that the law is inconsistent with this act.
If the protection in state law affords
consumers greater protection than in this
law, then the law is not inconsistent.
CFPB will issue NPRM when a majority of
states have enacted a resolution supporting
establishment or modification of a consumer
protection regulation by the CFPB.
46
Preservation of State Enforcement
Powers (sec. 1042)
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State AG may enforce the CFP Act generally and
CFPB regulations, except as to national banks and
federal thrifts.
State AGs may enforce CFPB regulations against
national banks and federal thrifts, but not the general
provisions of the Act.
State regulators may enforce CFP Act and CFPB
regulations as to state-chartered entities under their
jurisdiction.
Before initiating an action, state AG must provide a
copy of the complaint to the CFPB and prudential
regulator, if any.
State authority to enforce enumerated statutes is
status quo as provided in those statutes.
47
Preemption Standard (sec. 1044)
State consumer financial laws only preempted if Application of state law would be discriminatory for national
banks in comparison with effect on state banks
 State consumer financial law is preempted by the legal standard
of Supreme Court Barnett Bank decision, in which the state
consumer financial law prevents or significantly interferes with
the exercise by the national bank of its powers.
 State consumer financial law is preempted by a provision of
federal law other than this title.
 Any preemption determination may be made by a court or by
regulation or order of OCC on a case-by-case basis. OCC
must first consult with CFPB and take its views into account
when making a determination.
48
OCC Periodic Review of
Preemption (sec 1044)
OCC required to conduct a review through
notice and public comment, of each
determination that a provision of federal law
preempts a state consumer financial law.
 Conduct within 5 years after determination,
and at least once every 5 years thereafter.
 OCC must publish decision to continue/
rescind/amend the determination.

49
Preservation of Powers Related to
Charging Interest (sec 1044)

No provision of law shall alter or otherwise
affect the laws for charging interest by a
national bank at the rate allowed by the laws
of the state where the bank is located.
50
Visitorial Powers for National Banks
& Savings Associations (sec. 1047)


In accordance with Cuomo decision no
provisions shall be construed as limiting or
restricting the authority of any state AG to
bring an action against a national bank to
enforce applicable law and seek relief
authorized by the law.
Ability of OCC to bring an enforcement
action does not preclude any private party
from enforcing rights granted under federal
or state law in the courts.
51
Subtitle F – Transfer of Functions
and Personnel; Transitional
Provisions
52
Transfer of Consumer Financial
Protection Functions (sec. 1061)

Consumer financial protection functions will
be transferred from the following to the
CFPB:
◦
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◦
◦
◦
◦
◦

Federal Reserve
FDIC
FTC
NCUA
OCC
OTS
HUD
Transfer will occur on designated transfer
date or day before depending on agency.
53
Designated Transfer Date (sec. 1062)
Not later than 60 days after date of enactment
(7/21/10), Treasury Secretary shall, in consultation
with Fed Chair, Chairperson of the FDIC, Chair of
FTC, Chair of NCUA, Comptroller of the Currency,
Director of OTS, HUD Secretary, OMB Director,
designate a single calendar date for the transfer of
functions to the CFPB
 Date cannot be earlier than 180 days nor later than
12 months
 Date can be extended by an additional 6 months if
Treasury Secretary transmits to Congress –

◦ Determination that transition is not feasible within 12
months
◦ Explanation of why extension is necessary
◦ Description of steps to be taken to effect an orderly
transition within the extended time period
54
Interim Authority of the Secretary
(sec. 1066)
Treasury Secretary is authorized to
perform the functions of the Bureau
under this subtitle until the Director of
the Bureau is confirmed by the Senate.
 Department of the Treasury may provide
administrative services necessary to
support the CFPB before the designated
transfer date.

55
Subtitle G – Regulatory
Improvements
56
Treasury Dept Study on Ending
Conservatorship of Fannie Mae &
Freddie Mac (sec 1074)

Treasury Secretary will conduct study/
develop recommendations on options for
ending the conservatorship of Fannie Mae
and Freddie Mac, while minimizing costs to
taxpayers, including options such as:
◦
◦
◦
◦
◦
Gradual wind-down and liquidation
Privatization
Incorporation of functions into a federal agency
Dissolution into smaller companies
Any other measures determined appropriate
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Interchange Fees (sec. 1075)
Interchange fees must be reasonable and
proportional to the cost incurred by the issuer
for the transaction.
 CFPB will issue regulations no later than 9
months after enactment to establish standards for
assessing whether interchange fees is reasonable
and proportional to the cost
 Any issuer that has less than $10 billion in assets
is exempt
 Government-administered payment programs and
reloadable prepaid cards are exempt

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Interchange Fees (sec. 1075) (continued)
A payment card network is prohibited from inhibiting a discount or in-kind
incentive for payment by the use of cash, checks, debit cards or credit
cards to the extent that –
◦ Discounts or in-kind incentives for debit-card payment on the basis of
the issuer or payment card network in the case of the use of debit or
credit cards and
◦ Federal law and applicable state law require such discount or in-kind
incentive is offered to all prospective buyers and disclosed clearly and
conspicuously.
 A payment card network shall not inhibit the ability of any person to set a
minimum dollar value for the acceptance by that person of credit cards to
the extent that –
◦ Such minimum dollar value does not differentiate between issuers and
between payment card networks and
◦ Such minimum dollar value does not exceed $10.00
 Payment card network shall not inhibit the ability of any federal agency or
university to set a maximum dollar value for the acceptance of credit
cards, to the extent that such maximum dollar value does not differentiate
between issuers or between payment card networks.

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Reverse Mortgage Study and
Regulations (sec. 1076)
Not later than 1 year after the designated
transfer date, CFPB shall conduct a study on
reverse mortgage transactions.
 If CFPB determines through the study that
conditions or limitations on reverse mortgage
transactions are necessary to protect borrowers
for funding investments, annuities and other
investment products and the suitability of the
borrower in obtaining a reverse mortgage.
 The regulations may identify any practice as unfair,
deceptive or abusive in connection with a reverse
mortgage transaction and provide for an
integrated disclosure standard and model
disclosures required under TILA and RESPA.

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Report on Private Education Loans
and Lenders (Sec. 1077)

Not later than 2 years after enactment, CFPB and Dept of Education, in consultation with
FTC and AG, shall submit a report to House and Senate Banking and Education
Committees on private education loans and lenders.

Report will examine, at a minimum –
◦ Growth and changes of private education loan market in the US;
◦ Factors influencing such growth and changes;
◦ Extent to which students and parents rely on private student loans to finance
postsecondary education and the private education loan indebtedness of borrowers;
◦ The characteristics of private education loan borrowers, including, types of institutions
attended, socioeconomic characteristics (income, education level, race, geographic
background, age, gender);
◦ Other forms of financing used;
◦ Whether federal loan options are exhausted prior to taking out private loans;
◦ Whether borrowers are dependent or independent students;
◦ Whether borrowers are enrolled in program leading to a certificate, degree, BA,
graduate or professional degree; and
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Report on Private Education Loans
and Lenders (Sec. 1077) (continued)
◦ If practicable, employment and repayment behaviors;
◦ Characteristics of the lenders (for-profit, non-profit, or universities);
◦ Underwriting criteria used by private lenders;
◦ Terms, conditions and pricing of private education loans;
◦ Consumer protections available, including effectiveness of current
disclosures and borrowers awareness and understanding about terms
and conditions of various financial products;
◦ Whether federal regulators and the public have access to ensure that
loans are provided in accordance with fair lending laws and that allows
public officials to determine lender compliance with fair lending laws;
and
◦ Any statutory or legislative recommendations to improve consumer
protections for private education loans.
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Study on Credit Scores (sec. 1078)
CFPB will study the nature, range and size
of variations between credit scores sold
to creditors and those sold to consumers
by consumer reporting agencies that
compile and maintain files on consumers
on a nationwide basis and whether such
variations disadvantage consumers.
 CFPB will submit the report to Congress
not later than 1 year after date of
enactment.

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Small Business and CFPB Rules
(sec. 1100G)
CFPB must identify representatives of small entities in
consultation with the Small Business Administration
 CFPB must collect advice and recommendations from
these representatives
 CFPB must conduct regulatory flexibility analysis
including

◦ Any projected increase in cost of credit for small entities
◦ Any significant alternatives to the rule which accomplishes
the stated objectives and minimize any increase in cost of
credit for small entities
◦ Advice and recommendations of the above representatives
of small entities.
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