"When you buy a toaster, if it explodes in your face there's a law that says your toasters need to be safe. But when you get a credit card, or you get a mortgage, there's no law on the books that says if that explodes in your face financially, somehow you're going to be protected." -President Barack Obama, March 19, 2009 on The Tonight Show with Jay Leno.
In 2009, President Obama proposed the creation of a Federal agency to protect the interests of American consumers as part of an overall plan to reform the financial industry. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law. This Act created the Consumer Financial Protection Bureau (CFPB).
The mission of the CFPB is to "make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products." Among other things, the Bureau plans to:
- Conduct rule-making, supervision, and enforcement for Federal consumer financial protection laws;
- Restrict unfair, deceptive, or abusive acts or practices;
- Create a center to take consumer complaints;
- Promote financial education;
- Research consumer behavior;
- Monitor financial markets for new risks to consumers; and
- Enforce laws that outlaw discrimination and other unfair treatment in consumer finance.
One of the ways the Bureau plans to accomplish these task is by consolidating the consumer protection functions of several other agencies under one roof. This transfer of responsibility is scheduled to take place on July 21, 2001, the one year anniversary of the Act's passing. Agencies that will be transferring responsibilities and employees to the CFPB include: the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Reserve System, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.
The CFPB is an autonomous entity within the Federal Reserve System and will eventually be led by a director; however, the President’s nomination has not yet be sent to the Senate for confirmation. Harvard law Professor Elizabeth Warren, who is credited with being the first to suggest the need for such an agency to exist, is currently overseeing the Bureau as a special adviser.
For more information about the CFPB, visit their just-launched website ConsumerFinance.gov.
Consumers should also be aware that there are state and county consumer protection offices. For a list of consumer protection offices, please visit the Federal Citizen Information Center's website at http://consumeraction.gov/state.shtml.