Curtis W. Copeland
Specialist in American National Government
Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203, July 21, 2010) consolidates many federal consumer protection responsibilities into a new Bureau of Consumer Financial Protection (often referred to as the Consumer Financial Protection Bureau, or CFPB) within the Federal Reserve System. The act transfers supervisory and enforcement authority over a number of consumer financial products and services to the Bureau on a still-tobe- determined transfer date during calendar year 2011. Title X and Title XIV of the act contain numerous provisions that require or permit the CFPB to issue regulations implementing the statute's provisions. This report describes those provisions, notes that certain regulatory oversight tools will not be available for CFPB rules, and discusses the authority of a council of bank regulators to "set aside" the Bureau's rules.
Section 1022 alone gives the CFPB broad rulemaking powers, authorizing it to prescribe such rules "as may be necessary or appropriate" to enable the Bureau to administer federal consumer financial protection laws. The act contains many other provisions that require or permit the Bureau to issue rules, most of which give the Bureau substantial discretion regarding whether rules need to be issued, the contents of those rules, and when they must be issued. The Bureau also assumes responsibility for certain transferor agencies' existing rules, proposed rules that have not been made final, and final rules that have not taken effect. Therefore, other than for about 20 rules that are specifically required in the statute, it is not currently possible to determine how many rules the Bureau will issue, or the contents of those rules. Although most of the Bureau's rulemaking authority and discretion is the same as it was before being transferred from the safety and soundness (prudential) regulators, it is not clear that those authorities and discretion will be exercised in the same way.
Like other independent regulatory agencies, some regulatory oversight methods will not be available for CFPB rules. The Bureau's significant rules will not be reviewed by the Office of Management and Budget (OMB) under Executive Order 12866, and those rules will not be subject to the cost-benefit analysis requirements in the order. The Bureau may be able to void OMB disapprovals of its collections of information under the Paperwork Reduction Act. Because the CFPB might not receive appropriated funds, Congress may not be able to control the Bureau's rulemaking through appropriations restrictions. Also, the effectiveness of new requirements placed on the Bureau to examine its rules within five years, and to take certain actions under the Regulatory Flexibility Act, may depend on how the Bureau interprets key terms.
Congress did, however, empower the newly created Financial Stability Oversight Council (composed primarily of the heads of the prudential regulatory agencies from which the CFPB was formed) to "stay" or "set aside" all or part of a Bureau rule that it concludes would put the safety and soundness of the U.S. banking or financial systems at risk. No other executive branch entity (including OMB) has previously been given the authority to nullify an agency's rules, and the authority to set aside a portion of a rule is greater than the expedited authority Congress gave itself through the Congressional Review Act (CRA). However, several aspects of the Council review process are currently unclear (e.g., whether the Council must vote to stay a rule).
Although Congress may not be able to use appropriations restrictions to control CFPB rulemaking, Congress still has an array of oversight tools available, including confirmation hearings, oversight hearings, meetings between individual Members and the Bureau, and CRA resolutions of disapproval. This report will not be updated.
Date of Report: August 25, 2010
Number of Pages: 40
Order Number: R41380
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Thursday, September 9, 2010
The Dodd-Frank Wall Street Reform and Consumer Protection Act: Regulations to be Issued by the Consumer Financial Protection Bureau
Curtis W. Copeland