1. Wireless Access Code: 9166703926 Download the agenda PDF at: www.cwagweb.org/Disneyland/agenda.html

2. Introduction of the Consumer Financial Protection Bureau (CFPB) Nick Rathod Assistant Director for Intergovernmental Affairs

3. A (very brief) timeline 2007 The United States starts facing its most significant financial crisis since the Great Depression. 2009 President Obama proposes a consumer-protection bureau as part of Wall Street reform. July 21, 2010 The Dodd-Frank Wall Street Reform and Consumer Protection Act becomes law. Implementation of CFPB begins immediately under the Treasury Department. July 21, 2011 The CFPB becomes a bureau. 3

4. Timeline cont. January 4, 2012 Richard Cordray appointed as first Director of the CFPB; CFPB begins non-bank supervision program. July 18, 2012 The CFPB announces its first enforcement action, an order requiring Capital One Bank to refund approximately $140 million to consumers and pay an additional $25 million fine for deceptive marketing of credit card “add-on products.” July 21, 2012 4 CFPB marks its first anniversary.

5. A consumer finance marketplace… where customers can see prices and risks up front and where they can easily make product comparisons; in which no one can build a business model around unfair, deceptive, or abusive practices; that works for American consumers, responsible providers and the economy as a whole. Our Vision 5

6. The consumer bureau is a 21st Century agency that helps make consumer finance markets work for all consumers -- 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 is working to: – Educate: An informed consumer is the first line of defense against abusive practices. – Enforce: The CFPB supervises banks, credit unions, and other financial companies, and we will enforce Federal consumer financial laws. – Study: The Bureau gathers and analyzes available information to better understand consumers, financial services providers, and consumer financial markets. Our Mission 6

7. CFPB The Toolbox 7

8. CFPB Organizational Units

9. The CFPB Toolbox: Many Different Approaches 9 Supervision/Examination Consumer Response Enforcement Consumer Engagement Research, Markets & Regulations External Affairs Supervision/Examination Consumer Response Enforcement Consumer Engagement Research, Markets & Regulations External Affairs

10. Consumer Response www.consumerfinance.gov 10 As of July 21, 2011, began receiving credit card-related complaints and now taking complaints on all consumer finance related products. Receive information from consumers for all matters via Tell Your Story portal Call centers provide services for hearing and speech-impaired, accommodate public in 189 languages (855) 411-CFPB (2372) (Eng./Esp.) TTY/TDD (855) 729-CFPB (2372)

11. Specialized Functions and Offices 11 Office of Students Office of Older Americans Office of Servicemember Affairs Fair Lending

12. Engages with external stakeholders on information sharing, collaboration, coordination, and other initiatives. Intergovernmental Affairs Community Affairs Legislative Affairs Media Community Banks and Credit Unions Intergovernmental Affairs Attorneys General Governors State Legislatures Local government (cities, towns, counties) Tribal governments External Affairs 12

13. Attorneys General Essential partners who let us know what we should be watching— where our supervision and enforcement teams should focus their attention and what works in improving consumer education—and what our policymaking staff should consider. As law enforcement closest to consumers, Attorneys General have the opportunity to educate, empower, and protect their citizens. IGA is your front door to the CFPB External Affairs 13

14. Field Events Birmingham, Alabama- Payday Lending (January 19, 2012) New York, New York- Checking Accounts (February 22, 2012) Durham, North Carolina- Prepaid Cards (May 23, 2012) Tampa, Florida- Reverse Mortgages (June 25, 2012) (rained out) Detroit, Michigan- Credit Reporting (July 16, 2012) External Affairs 14

15. Voters favor the Dodd Frank financial reform law by a 53-point margin (73-20). Voters support the CFPB by a 40-point margin. Two- thirds (66 percent) of voters overall agree that the CFPB is needed. The Creation of the CFPB … One Year Later 15

16. Cooperative Consumer Protection: The CFPB and State Attorneys General Christopher L. Peterson Senior Counsel for Enforcement Strategy, West Region CFPB Office of Enforcement John J. Flynn Endowed Professor of Law University of Utah

17. “There is no practice more dangerous than borrowing money … for when money can be had in this way, repayment is seldom thought of in time … Exertions to raise it by dint of industry ceases. It comes easy and is spent freely and many things indulged in that would never be thought of, if to be purchased by the sweat of the brow. In the mean time, the debt is accumulating like a snowball in rolling.” George Washington on Consumer Finance

18. “There is no practice more dangerous than borrowing money … for when money can be had in this way, repayment is seldom thought of in time … Exertions to raise it by dint of industry ceases. It comes easy and is spent freely and many things indulged in that would never be thought of, if to be purchased by the sweat of the brow. In the mean time, the debt is accumulating like a snowball in rolling.” George Washington on Consumer Finance

19. “There is no practice more dangerous than borrowing money … for when money can be had in this way, repayment is seldom thought of in time … Exertions to raise it by dint of industry ceases. It comes easy and is spent freely and many things indulged in that would never be thought of, if to be purchased by the sweat of the brow. In the mean time, the debt is accumulating like a snowball in rolling.” George Washington on Consumer Finance

20. “There is no practice more dangerous than borrowing money … for when money can be had in this way, repayment is seldom thought of in time … Exertions to raise it by dint of industry ceases. It comes easy and is spent freely and many things indulged in that would never be thought of, if to be purchased by the sweat of the brow. In the mean time, the debt is accumulating like a snowball in rolling.” George Washington on Consumer Finance

21. “There is no practice more dangerous than borrowing money … for when money can be had in this way, repayment is seldom thought of in time … Exertions to raise it by dint of industry ceases. It comes easy and is spent freely and many things indulged in that would never be thought of, if to be purchased by the sweat of the brow. In the mean time, the debt is accumulating like a snowball in rolling.” George Washington on Consumer Finance

22. “There is no practice more dangerous than borrowing money … for when money can be had in this way, repayment is seldom thought of in time … Exertions to raise it by dint of industry ceases. It comes easy and is spent freely and many things indulged in that would never be thought of, if to be purchased by the sweat of the brow. In the mean time, the debt is accumulating like a snowball in rolling.” George Washington on Consumer Finance

23. 1. An introduction to the CFPB’s Department of Supervision, Enforcement and Fair Lending 2. A very short primer on law relevant to the CFPB 3. CFPB Office of Enforcement Cooperation with State Attorneys General 23 Overview

24. CFPB’s Department of Supervision, Enforcement and Fair Lending

25. This department is divided into four offices: 1. Depository Institution Supervision 2. Non-Depository Institution Supervision 3. Fair Lending and Equal Opportunity 4. Office of Enforcement 25 CFPB’s Department of Supervision, Enforcement and Fair Lending

26. CFPB has authority to supervise and examine banks and credit unions with assets exceeding $10 billion, their affiliates and their service providers. CFPB currently has identified 111 such entities. Dodd-Frank defines "affiliates" to include any person that controls, is controlled by, or is under common control with another person. (Sec. 1002(1)) "Service providers" are defined as companies providing a material service to a covered institution. (Sec. 1002(26)) "Material services" include designing, operating, or maintaining a consumer financial product or service and processing related transactions. 26 Depository Institution Supervision

27. The Office of Non-Depository Supervision has jurisdiction over all sizes of nonbank firms that offer or provide: Origination, brokerage, or servicing of residential mortgage loans, or loan modification and foreclosure relief services related to such loans Payday loans Private education loans Non-Depository Supervision Firms Subject to CFPB’s Nonbank Supervision Program Under Section 1024 27

28. The Office of Non-Depository Supervision has also has jurisdiction over a “larger participants” in other markets of consumer financial products or services. These participants are still being defined, but will include: Credit Reporting Agencies with more than $7 million in annual receipts from consumer reporting activities, Large third party debt collection agencies. Other entities which may be posing risks to consumers when (if the CFPB has reasonable cause to determine, after notice and opportunity to respond, that the company has engaged in conduct that poses risks to consumers) Non-Depository Supervision Firms Subject to CFPB’s Nonbank Supervision Program Under Section 1024 28

29. Leads the CFPB’s efforts to ensure fair, equitable, and nondiscriminatory access to credit for both individuals and communities Working with other CFPB units, this office: Reviews lenders’ policies, procedures, and lending activity to detect and address potential discriminatory practices. Brings enforcement actions to stop discriminatory practices and remedy harm to consumers. 29 Office of Fair Lending and Equal Opportunity

30. Investigations: Power to issue civil investigative demands (CIDs) for the production of documents or oral testimony Rules: 12 CFR part 1080 Modeled on FTC Act and FTC Rules Administrative Hearings: Ability to hold hearings and adjudication proceedings to obtain cease and desist orders, penalties, or equitable relief Rules: 12 CFR part 1081 Expedited procedures; affirmative disclosure; no discovery depositions Litigation: Power to commence civil actions for legal and equitable relief Office of Enforcement: Powers 30

31. Sec. 1055 allows for “any appropriate legal or equitable relief with respect to a violation of Federal consumer financial law.” Relief includes, but is not limited to: Rescission or reformation of contracts Refund of money or return of real property Restitution Disgorgement for unjust enrichment Payment of damages or other monetary relief Public notification regarding the violation Limits on the activities or function of the person Civil monetary penalties Recovery of costs Office of Enforcement: Remedies 31

32. Civil money penalties available both administratively and in federal court. Three tiers of penalties: Up to $5,000/day Up to $25,000/day for reckless violations Up to $1,000,000/day for knowing violations Statutory factors : Size, resources, and good faith Gravity of violation Severity of consumer risks or losses, including number of products/services sold/provided History of previous violations “other such matters as justice may require” Enforcement Office Civil Money Penalties Section 1055(c) 32

33. 1.Title X of the Dodd Frank Act: Unfair, Deceptive, Abusive Acts and Practices. 2.Enumerated consumer protection statutes. 6 A (very brief) Primer on CFPB-related law

34. UDAAP: Title X prohibits any covered person or service provider from engaging in unfair, deceptive, or abusive acts or practices relating to consumer financial products and services. Sec. 1031, 1036. Aiding and abetting liability: For “knowingly or recklessly provid[ing] substantial assistance” to a covered person or service provider in violation of 1031. Sec. 1036(a)(3). Regulations: The Bureau may also promulgate regulations under Title X to define UDAAP acts and practices. Sec. 1031. 6 Unfair, Deceptive, or Abusive Acts and Practices

35. Covered Persons: any person that engages in offering or providing a consumer financial product or service; and affiliates of such a person if the affiliate acts as a service provider. Sec. 1002(6). Service Provider: any person that provides a material service to a covered person in connection with the offering or provision of a consumer financial product or service. Sec. 1002(26). 35 Covered Persons or Service Providers

36. Alternative Mortgage Transaction Parity Act Consumer Leasing Act Electronic Fund Transfer Act Equal Credit Opportunity Act Fair Credit Billing Act Fair Credit Reporting Act Home Owners Protection Act Fair Debt Collection Practices Act Federal Deposit Insurance Act (selected sections) Gramm-Leach-Bliley Act (selected sections) 18 Enumerated Statutes Home Mortgage Disclosure Act Home Ownership and Equity Protection Act Interstate Land Sales Full Disclosure Act Omnibus Appropriations Act of 2009 (section 626) Real Estate Settlement Procedures Act S.A.F.E. Mortgage Licensing Act Truth in Lending Act Truth in Savings Act 36

37. Alternative Mortgage Transaction Parity Act Consumer Leasing Act Electronic Fund Transfer Act Equal Credit Opportunity Act Fair Credit Billing Act Fair Credit Reporting Act Home Owners Protection Act Fair Debt Collection Practices Act Federal Deposit Insurance Act (selected sections) Gramm-Leach-Bliley Act (selected sections) Scope of Enforcement 10 of these statutes directly effect the residential mortgage market Home Mortgage Disclosure Act Home Ownership and Equity Protection Act Interstate Land Sales Full Disclosure Act Omnibus Appropriations Act of 2009 (section 626) Real Estate Settlement Procedures Act S.A.F.E. Mortgage Licensing Act Truth in Lending Act Truth in Savings Act 37

38. Congress has given state Attorneys General new enforcement authority as a matter of federal law. 12 USC § 5552: “[T]he attorney general (or the equivalent thereof) of any State may bring a civil action in the name of such State in any district court of the United States in that State or in State court that is located in that State and that has jurisdiction over the defendant, to enforce provisions of this title or regulations issued under this title, and to secure remedies under provisions of this title or remedies otherwise provided under other law.” 38 Cooperation with Attorneys General: Dodd-Frank Grants new Federal Power to State A.G.s

39. Congress has given state Attorneys General new enforcement authority as a matter of federal law. 12 USC § 5552: “[T]he attorney general (or the equivalent thereof) of any State may bring a civil action in the name of such State in any district court of the United States in that State or in State court that is located in that State and that has jurisdiction over the defendant, to enforce provisions of this title or regulations issued under this title, and to secure remedies under provisions of this title or remedies otherwise provided under other law.” 39 Cooperation with Attorneys General: Dodd-Frank Grants new Federal Power to State A.G.s

40. Congress has given state Attorneys General new enforcement authority as a matter of federal law. 12 USC § 5552: “[T]he attorney general (or the equivalent thereof) of any State may bring a civil action in the name of such State in any district court of the United States in that State or in State court that is located in that State and that has jurisdiction over the defendant, to enforce provisions of this title or regulations issued under this title, and to secure remedies under provisions of this title or remedies otherwise provided under other law.” 40 Cooperation with Attorneys General: Dodd-Frank Grants new Federal Power to State A.G.s

41. Congress has given state Attorneys General new enforcement authority as a matter of federal law. 12 USC § 5552: “[T]he attorney general (or the equivalent thereof) of any State may bring a civil action in the name of such State in any district court of the United States in that State or in State court that is located in that State and that has jurisdiction over the defendant, to enforce provisions of this title or regulations issued under this title, and to secure remedies under provisions of this title or remedies otherwise provided under other law.” 41 Cooperation with Attorneys General: Dodd-Frank Grants new Federal Power to State A.G.s

42. Congress has given state Attorneys General new enforcement authority as a matter of federal law. 12 USC § 5552: “[T]he attorney general (or the equivalent thereof) of any State may bring a civil action in the name of such State in any district court of the United States in that State or in State court that is located in that State and that has jurisdiction over the defendant, to enforce provisions of this title or regulations issued under this title, and to secure remedies under provisions of this title or remedies otherwise provided under other law.” 42 Cooperation with Attorneys General: Dodd-Frank Grants new Federal Power to State A.G.s

43. State Attorney Generals now have the authority to bring enforcement actions against national bank or Federal savings association. 12 USC § 5552: “The attorney general (or the equivalent thereof) of any State may bring a civil action in the name of such State against a national bank or Federal savings association in any district court of the United States in the State or in State court that is located in that State and that has jurisdiction over the defendant to enforce a regulation prescribed by the Bureau under a provision of this title.” 43 Cooperation with Attorneys General: Dodd-Frank Grants new Federal Power to State A.G.s

44. State Attorney Generals now have the authority to bring enforcement actions against national bank or Federal savings association. 12 USC § 5552: “The attorney general (or the equivalent thereof) of any State may bring a civil action in the name of such State against a national bank or Federal savings association in any district court of the United States in the State or in State court that is located in that State and that has jurisdiction over the defendant to enforce a regulation prescribed by the Bureau under a provision of this title.” 44 Cooperation with Attorneys General: Dodd-Frank Grants new Federal Power to State A.G.s

45. State Attorney Generals now have the authority to bring enforcement actions against national bank or Federal savings association. 12 USC § 5552: “The attorney general (or the equivalent thereof) of any State may bring a civil action in the name of such State against a national bank or Federal savings association in any district court of the United States in the State or in State court that is located in that State and that has jurisdiction over the defendant to enforce a regulation prescribed by the Bureau under a provision of this title.” 45 Cooperation with Attorneys General: Dodd-Frank Grants new Federal Power to State A.G.s

46. To bring an action under the Dodd-Frank UDAAP rules, the State Attorney General simply needs to provide notice of the action to the CFPB. “ The notification required under this paragraph shall, at a minimum, describe— i.the identity of the parties; ii.the alleged facts underlying the proceeding; and iii.whether there may be a need to coordinate the prosecution of the proceeding so as not to interfere with any action, including any rulemaking, undertaken by the Bureau.” CFPB has the option of intervening as an additional party in a state action. 46 Cooperation with Attorneys General: Dodd-Frank Grants new Federal Power to State A.G.s

47. It is important, likewise, that the habits of thinking in a free country should inspire caution, in those entrusted with its administration, to confine themselves within their respective constitutional spheres, avoiding in the exercise of the powers of one department to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create, whatever the form of government, a real despotism.... [L]et there be no change by usurpation; for, though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed. The precedent must always greatly overbalance in permanent evil any partial of transient benefit, which the use can at any time yield. George Washington on Consumer Finance

48. It is important, likewise, that the habits of thinking in a free country should inspire caution, in those entrusted with its administration, to confine themselves within their respective constitutional spheres, avoiding in the exercise of the powers of one department to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create, whatever the form of government, a real despotism.... [L]et there be no change by usurpation; for, though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed. The precedent must always greatly overbalance in permanent evil any partial of transient benefit, which the use can at any time yield. George Washington on Consumer Finance

49. It is important, likewise, that the habits of thinking in a free country should inspire caution, in those entrusted with its administration, to confine themselves within their respective constitutional spheres, avoiding in the exercise of the powers of one department to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create, whatever the form of government, a real despotism.... [L]et there be no change by usurpation; for, though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed. The precedent must always greatly overbalance in permanent evil any partial of transient benefit, which the use can at any time yield. George Washington on Consumer Finance

50. It is important, likewise, that the habits of thinking in a free country should inspire caution, in those entrusted with its administration, to confine themselves within their respective constitutional spheres, avoiding in the exercise of the powers of one department to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create, whatever the form of government, a real despotism.... [L]et there be no change by usurpation; for, though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed. The precedent must always greatly overbalance in permanent evil any partial of transient benefit, which the use can at any time yield. George Washington on Consumer Finance

51. It is important, likewise, that the habits of thinking in a free country should inspire caution, in those entrusted with its administration, to confine themselves within their respective constitutional spheres, avoiding in the exercise of the powers of one department to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create, whatever the form of government, a real despotism.... [L]et there be no change by usurpation; for, though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed. The precedent must always greatly overbalance in permanent evil any partial of transient benefit, which the use can at any time yield. George Washington on Consumer Finance

52. CFPB Enforcement Office Regional Structure and Cooperation Manuel Alvarez Enforcement Attorney, West Region CFPB Office of Enforcement

53. PARTNERSHIPS: Collaboration and Cooperation 30

54. Joint interest agreements for enforcement actions Market Sweeps and other market-wide coordinated actions Complimentary investigations/actions to comprehensively address problems Joint investigations (Sec. 1052(a)) Bureau may intervene into lawsuits brought by State Attorneys General or State Regulators (Sec. 1042(b)(2)(A)) Non-profit/Industry/Advocacy outreach and coordination 36 Enforcement Opportunities to Coordinate and Partner: Law Enforcement

55. 55 CFPB’s Regions

56. Providing referrals and information regarding consumer complaints Providing comments on rulemaking and subjects and ideas for research Partnership with consumer engagement to expand reach of consumer education Provide policy input and research findings to Research & Markets groups Other opportunities for coordinated outreach and coordination 37 Other Opportunities to Coordinate and Partner

57. CFPB PROBE INTO CAPITAL ONE CREDIT CARD MARKETING RESULTS IN $140 MILLION CONSUMER REFUND Misinformed about cost of the products Enrolled without their consent Misled about eligibility Misinformed about cost of the products Enrolled without their consent Coordination with Office of the Comptroller of the Currency (OCC) 37 Partnership in Action

58. Nicholas Rathod Assistant Director, Intergovernmental Affairs Nicholas.Rathod@cfpb.gov (202) 435-7796 Christopher Peterson Senior Counsel for Enforcement Strategy, West Region Office of Enforcement Christopher.Peterson@cfpb.gov (202) 754-0176 Manuel P. Alvarez Enforcement Attorney, West Region Office of Enforcement Manuel.Alvarez@cfpb.gov (202) 384-7976 www.ConsumerFinance.gov

59. Wireless Access Code: 9166703926 Download the agenda PDF at: www.cwagweb.org/Disneyland/agenda.html