Morgan Lewis Profiles the Potential Bureau of Consumer Financial Protection

The Morgan Lewis law firm has published a client alert profiling the contours of the Bureau of Consumer Financial Protection contemplated in the Senate version of financial reform, the Restoring American Financial Stability Act of 2010 (S. 3217), and the House version, ‘The Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173).  Though the memorandum predates by about a week the compromise legislation agreed upon June 25, the document provides some valuable insights into what the ultimate consumer financial protection agency may look like: 

Once the final details emerge from a congressional conference committee as to the degree of independence, source of funding, and preemptive [effect] of its rulings, the difficult work of creating a new federal bureau or agency will begin. While the name of the bureau or agency is yet unknown—it may be a stand-alone consumer financial protection agency (CFPA) or a federal bureau—it is clear that a very independent agency with a very distinct mission will soon be in business. The rationale for the creation of a consumer financial protection agency and the congressional intent as to its purpose set the stage for yet another layer of regulation for banks and thrifts and a new era of regulation for many firms that are presently either lightly regulated or unregulated.

The publication examines the regulatory rationale underlying creating the agency, the way each bill empowers and situates the agency, and the primary focus or mission of the potential new regulator.  The memorandum also addresses how the two bills deal with federal preemption of state regulations, and how the agency may function vis-à-vis the National Bank and Federal Thrift Charter.  

As an epilogue to this memorandum, it also may be useful to review the following excerpt about the Consumer Financial Protection Bureau from the House Committee on Financial Services' fact sheet about the compromise Dodd-Frank Act of 2010 hammered out on Friday, June 25.  


  • The Consumer Financial Protection Bureau
    Independent Head: Led by an independent director appointed by the President and confirmed by the Senate.
  • Independent Budget: Dedicated budget paid by the Federal Reserve system.
  • Independent Rule Writing: Able to autonomously write rules for consumer protections governing all financial institutions - banks and non-banks - offering consumer financial services or products. 
  • Examination and Enforcement: Authority to examine and enforce regulations for banks and credit unions with assets of over $10 billion and all mortgage-related businesses (lenders, servicers, mortgage brokers, and foreclosure scam operators), payday lenders, and student lenders as well as other non-bank financial companies that are large, such as debt collectors and consumer reporting agencies.  Banks and Credit Unions with assets of $10 billion or less will be examined for consumer complaints by the appropriate regulator.
  • Consumer Protections: Consolidates and strengthens consumer protection responsibilities currently handled by the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Federal Reserve, National Credit Union Administration, the Department of Housing and Urban Development, and Federal Trade Commission. Will also oversee the enforcement of federal laws intended to ensure the fair, equitable and nondiscriminatory access to credit for individuals and communities.
  • Able to Act Fast:  With this Bureau on the lookout for bad deals and schemes, consumers won't have to wait for Congress to pass a law to be protected from bad business practices.
  • Educates: Creates a new Office of Financial Literacy.
    • Consumer Hotline: Creates a national consumer complaint hotline so consumers will have, for the first time, a single toll-free number to report problems with financial products and services.
  • Accountability: Makes one office accountable for consumer protections.  With many agencies sharing responsibility, it's hard to know who is responsible for what, and easy for emerging problems that haven't historically fallen under anyone's purview, to fall through the cracks.
  • Works with Bank Regulators: Coordinates with other regulators when examining banks to prevent undue regulatory burden.  Consults with regulators before a proposal is issued and regulators could appeal regulations they believe would put the safety and soundness of the banking system or the stability of the financial system at risk.
  • Clearly Defined Oversight:  Protects small business from unintentionally being regulated by the CFPB, excluding businesses that meet certain standards.   

The full Morgan Lewis publication, "The New Regulator on the Block-The Bureau of Consumer Financial Protection," is available at:

The House Committee on Financial Services' Dodd-Frank Act fact sheet is available at: