Aside from creating a lot of controversy, President Obama’s recess appointment of Richard Cordray as the first director of the Consumer Financial Protection Bureau (CFPB) left many people asking: What exactly is the CFPB and what does it do? In addition to bringing together under one roof the various rules, regulations and oversight authority that have historically been spread over multiple federal agencies and departments, the CFPB was created to educate consumers regarding financial matters and to extend federal oversight to non-bank entities that provide financial products or services to consumers.
The CFPB was created in July 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act increases federal oversight of the financial industry. The CFPB, which will ultimately operate as a bureau within the Federal Reserve, was created specifically to adopt rules and regulations to oversee businesses that provide financial products and services to consumers, including credit cards, student loans, mortgages, check cashing services, pay-day loans, online banking and credit reports.