After passing in the Senate yesterday, a new financial reform bill will soon be signed into law. It outlines various provisions designed to prevent another financial downturn in the United States, including the establishment of a new federal agency called the Consumer Financial Protection Bureau (CFPB). Under the existing system, several agencies regulate different aspects of consumer finance. By consolidating the responsibilities of these agencies into the CFPB, the government plans to create a single authority for rule-making, enforcement and education in the financial services industry. In addition to monitoring and enforcing its rules with credit card companies, mortgage brokers, banks and other financial services providers, the CFPB will have departments for research, tracking consumer complaints and expanding consumer financial literacy. The CFPB will be an autonomous bureau in the Federal Reserve and its $500 million budget will be financed by the Federal Reserve rather than by Congressional appropriation. Each CFPB director will be appointed by the President and confirmed by the Senate to serve a five year term. The governance of a single director will allow the bureau to act quickly in the event of a crisis, and the first CFPB director will have particularly wide authority as he or she will be responsible for refining the bureau's mission and initial priorities as well as drafting its initial set of consumer protection rules and enforcement procedures. Most CFPB employees will be transferred from existing agencies, including the Federal Reserve's consumer affairs division, Federal Trade Commission, Comptroller of the Currency's office and Federal Deposit Insurance Corporation.
As a government entity, the CFPB will be subject to the Freedom of Information Act and will create a new set of public records. Since transparency is one of its main goals, we can expect the bureau to release the majority of its records as they are created. To learn more about how the CFPB will operate and the bill itself, read these articles from the Wall Street Journal and CNN, or click here for a PDF of the full text of HR 4173 as passed by the Senate and the House.