Dodd-Frank Act - Title X: Bureau of Consumer Financial Protection

Bureau of Consumer Financial Protection will be established which shall regulate the offering and provision of consumer financial products or services under the Federal consumer financial laws. The Bureau is an Executive agency

Powers of the Bureau: The Bureau is authorized to establish the general policies of the Bureau with respect to all executive and administrative functions, including:

  • the establishment of rules for conducting the general business of the Bureau, in a manner not inconsistent with this title
  • to bind the Bureau and enter into contracts
  • directing the establishment and maintenance of divisions or other offices within the Bureau, in order to carry out the responsibilities under the Federal consumer financial laws, and to satisfy the requirements of other applicable law;
  • to coordinate and oversee the operation of all administrative, enforcement, and research activities of the Bureau;
  • to adopt and use a seal;
  • to determine the character of and the necessity for the obligations and expenditures of the Bureau;
  • the appointment and supervision of personnel employed by the Bureau;
  • the distribution of business among personnel appointed and supervised by the Director and among administrative units of the Bureau;
  • the use and expenditure of funds;
  • implementing the Federal consumer financial laws through rules, orders, guidance, interpretations, statements of policy, examinations, and enforcement actions performing such other functions as may be collecting and tracking complaints.
  • authorized or required by law.

Research: The Director shall establish a unit whose functions shall include researching, analyzing, and reporting on:

  1. developments in markets for consumer financial products or services, including market areas of alternative consumer financial products or services with high growth rates and areas of risk to consumers;
  2. access to fair and affordable credit for traditionally underserved communities;
  3. consumer awareness, understanding, and use of disclosures and communications regarding consumer financial products or services;
  4. consumer awareness and understanding of costs, risks, and benefits of consumer financial products or services;
  5. consumer behavior with respect to consumer financial products or services, including performance on mortgage loans; and
  6. experiences of traditionally underserved consumers, including un-banked and under-banked consumers.
  7. whose functions shall include providing information, guidance, and technical assistance regarding the offering and provision of consumer financial products or services to traditionally underserved consumers and communities.

The Director shall establish a unit whose functions shall include establishing a single, toll free

telephone number, a website, and a database or utilizing an existing database to facilitate the centralized collection of, monitoring of, and response to consumer complaints regarding consumer financial products or services. The Director shall coordinate with the Federal Trade Commission or other Federal agencies to route complaints to such agencies, where appropriate.

Routing calls to states: To the extent practicable, State agencies may receive appropriate complaints from the systems established:

  • the State agency system has the functional capacity to receive calls or electronic reports routed
  • by the Bureau systems;
  • the State agency has satisfied any conditions of participation in the system that the Bureau may
  • establish, including treatment of personally identifiable information and sharing of information on complaint resolution or related compliance procedures and resources; and
  • participation by the State agency includes measures necessary to provide for protection of personally
  • identifiable information that conform to the standards for protection of the confidentiality of personally
  • identifiable information and for data integrity and security that apply to the Federal agencies.

Reports to the Congress: The Director shall present an annual report to Congress not later than March 31 of each year on the complaints received by the Bureau in the prior year regarding consumer financial products and services.

Office of fair lending and equal opportunity

The Director shall establish within the Bureau the Office of Fair Lending and Equal Opportunity.

The Office of Fair Lending and Equal Opportunity shall have such powers and duties as the Director may delegate to the Office, including:

  • providing oversight and enforcement of Federal laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities that are enforced by the Bureau, including the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act;
  • coordinating fair lending efforts of the Bureau with other Federal agencies and State regulators, as appropriate, to promote consistent, efficient, and effective enforcement of Federal fair lending laws;
  • working with private industry, fair lending, civil rights, consumer and community advocates on the promotion of fair lending compliance and education
  • providing annual reports to Congress on the efforts of the Bureau to fulfill its fair lending mandate.

Office of Financial Education

The Director shall establish an Office of Financial Education, which shall be responsible for developing and implementing initiatives intended to educate and empower consumers to make better informed financial decisions. The Office of Financial Education will develop and implement a strategy to improve the financial literacy of consumers that includes measurable goals and objectives, in consultation with the Financial Literacy and Education Commission, consistent with the National Strategy for Financial Literacy, through activities including providing opportunities for consumers to access—

  • financial counseling, including community-based financial counseling, where practicable;
  • information to assist with the evaluation of credit products and the understanding of credit histories and
  • scores;
  • savings, borrowing, and other services found at mainstream financial institutions;
  • activities intended to
  • prepare the consumer for educational expenses and the submission of financial aid applications, and other major purchases;
    • reduce debt;
    • improve the financial situation of the consumer;
  • assistance in developing long-term savings strategies
  • wealth building and financial services during the preparation process to claim earned income tax credits and Federal benefits.

The Office of Financial Education shall coordinate with other units within the Bureau in carrying out its functions, including:

  • working with the Community Affairs Office to implement the strategy to improve financial literacy of consumers; and
  • working with the research unit established by the Director to conduct research related to consumer financial education and counseling.

The Director shall submit a report on its financial literacy activities and strategy to improve financial literacy of consumers to:

  • the Committee on Banking, Housing, and Urban Affairs of the Senate
  • the Committee on Financial Services of the House of Representatives

Membership in financial literacy and education study and report on financial literacy program

The Comptroller General of the United States shall conduct a study to identify:

  • the feasibility of certification of persons providing the programs or performing the activities
  • including recognizing outstanding programs, and developing guidelines and resources for community-based practitioners, including:
    • a potential certification process and standards for certification
    • appropriate certifying entities
    • resources required for funding such a process
    • a cost-benefit analysis of such certification
  • technological resources intended to collect, analyze evaluate, or promote financial literacy and counseling programs
  • effective methods, tools, and strategies intended to educate and empower consumers about
  • personal finance management
  • recommendations intended to encourage the development of programs that effectively improve
  • financial education outcomes and empower consumers to make better informed financial decisions based on findings.

Consumer Advisory Board

The Director will establish a Consumer Advisory Board to advise and consult with the Bureau 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.

The Director will seek to assemble experts in consumer protection, financial services, community development, fair lending and civil rights, and consumer financial products or services and representatives of depository institutions that primarily serve underserved communities, and representatives of communities that have been significantly impacted by higher-priced mortgage loans, and seek representation of the interests of covered persons and consumers, without regard to party affiliation.

Private Education Loan Ombudsman

The Secretary, in consultation with the Director, shall designate a Private Education Loan Ombudsman within the Bureau, to provide timely assistance to borrowers of private education loans.

Functions of Ombudsman

The Ombudsman designated will  in accordance with regulations of the Director, the Ombudsman will receive, review, and attempt to resolve informally complaints from borrowers of loans.  The Ombudsman will resolve  complaints in collaboration with the Department of Education and with institutions of  higher education, lenders, guaranty agencies, loan servicers, and other participants in private education loan programs not later than 90 days after the designated transfer date., establish a memorandum of understanding with the student loan ombudsman established .The Ombudsman will ensure coordination in providing assistance to and serving borrowers seeking to resolve complaints related to their private education or Federal student loans.

  • compile and analyze data on borrower complaints regarding private education loans
  • make appropriate recommendations to the Director, the Secretary, the Secretary of Education, the Committee on Banking, Housing, and Urban Affairs and the Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Financial Services and the Committee on Education and Labor of the House of Representatives.

Reverse Mortgage Study and Regulations

The Bureau shall conduct a study on reverse mortgage transactions.

Regulations: If the Bureau determines through the study required under subsection that conditions or limitations on reverse mortgage transactions are necessary or appropriate for accomplishing the purposes and objectives of this title, including protecting borrowers with respect to the obtaining of reverse mortgage loans for the purpose of funding investments, annuities, and other investment products and the suitability of a borrower in obtaining a reverse mortgage for such purpose.

The Bureau is expected to determine:

  • any practice as unfair, deceptive, or abusive in connection with a reverse mortgage transaction
  • provide for an integrated disclosure standard and model disclosures for reverse mortgage transactions, consistent

Report on private education loans and private educational lenders

The Director and the Secretary of Education, in consultation with the Commissioners of the Federal Trade Commission, and the Attorney General of the United States, shall submit a report to the Committee on Banking, Housing, and Urban Affairs and the Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Financial Services and the Committee on Education and Labor of the House of Representatives, on private education loans .

The report required by this section shall examine, at a minimum:

  • the growth and changes of the private education loan market in the United States;
  • factors influencing such growth and changes
  • the extent to which students and parents of students rely on private education loans to finance postsecondary education and the private education loan indebtedness of borrowers
  • the characteristics of private education loan borrowers, including—

(i)             the types of institutions of higher education that they attend;

(ii)            socio economic characteristics (including income and education levels, racial characteristics, geographical background, age, and gender)

(iii)           what other forms of financing borrowers use to

(iv)          pay for education;

(v)           whether they exhaust their Federal loan options before taking out a private loan;

(vi)          whether such borrowers are dependent or independent students or parents of such students;

(vii)         whether such borrowers are students enrolled in a program leading to a certificate, license, or credential

(viii)        other than a degree, an associates degree, a baccalaureate degree, or a graduate or professional degree; and

(ix)          if practicable, employment and repayment behaviors;

  • the characteristics of private educational lenders ,including whether such creditors are for-profit, non-profit, or institutions of higher education;
  • the underwriting criteria used by private educational lenders, including the use of cohort default rate  the terms, conditions, and pricing of private education loans
  • the consumer protections available to private education loan borrowers, including the effectiveness of existing disclosures and requirements and borrowers’ awareness and understanding about terms and conditions of various financial products;
  • whether Federal regulators and the public have access to information sufficient to provide them with assurances that private education loans are provided in accord with the Nation’s fair lending laws and that allows public officials to determine lender compliance with fair lending laws
  • any statutory or legislative recommendations necessary to improve consumer protections for private education loan borrowers and to better enable Federal regulators and the public to ascertain private educational lender compliance with fair lending laws.

Study and Report on Credit Scores

The Bureau shall conduct a study on the nature, range, and size of variations between the credit scores sold to creditors and those sold to consumers by consumer reporting agencies that compile and maintain files on consumers on a nation wide basis  of the Fair Credit Reporting Act and whether such variations disadvantage consumers.

Review, report, and program with respect to exchange facilitators

The Director shall review all Federal laws and regulations relating to the protection of consumers who use exchange facilitators for transactions primarily for personal, family, or household purposes

Not later than 1 year after the designated transfer date, the Director shall submit to Congress a report describing:

  1. recommendations for legislation to ensure the appropriate protection of consumers who use exchange facilitators for transactions primarily for personal, family, or household purposes.
  2. recommendations for updating the regulations of Federal departments and agencies to ensure the appropriate protection of such consumers
  3. recommendations for regulations to ensure the appropriate protection of such consumers.

Financial Fraud Provisions

The United States Sentencing Commission shall review and, if appropriate, amend the Federal Sentencing Guidelines and policy statements applicable to persons convicted of offenses relating to securities fraud or any other similar provision of law, in order to reflect the intent of Congress that penalties for the offenses under the guidelines and policy statements appropriately account for the potential and actual harm to the public and the financial markets from the offenses.

The United States Sentencing Commission shall ensure that the guidelines and policy statements, reflect:

  • the serious nature of the offenses described
  • the need for an effective deterrent and appropriate punishment to prevent the offenses;
  • the effectiveness of incarceration
  • consider the extent to which the guidelines appropriately account for the potential and actual harm
  • to the public and the financial markets resulting from the offenses
  • ensure reasonable consistency with other relevant directives and guidelines and Federal statutes;
  • make any necessary conforming changes to guidelines

Financial Institution Fraud

The United States Sentencing Commission shall review and, if appropriate, amend the Federal Sentencing Guidelines and policy statements applicable to persons convicted of fraud offenses relating to financial institutions or federally related mortgage loans and any other similar provisions of law, to reflect the intent of Congress that the penalties for the offenses under the guidelines and policy statements ensure appropriate terms of imprisonment for offenders involved in substantial bank frauds or other frauds relating to financial institutions.

The United States Sentencing Commission shall:

  • ensure that the guidelines and policy statements reflect  the serious nature of the offenses .
  • the need for an effective deterrent and appropriate punishment to prevent the offenses;
  • the effectiveness of incarceration
  • consider the extent to which the guidelines appropriately account for the potential and actual harm
  • to the public and the financial markets resulting from the offenses
  • ensure reasonable consistency with other relevant directives and guidelines and Federal statutes;
  • make any necessary conforming changes to guidelines
  • ensure that the guidelines adequately meet the purposes of sentencing
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