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The formation of the Consumer Financial Protection Bureau (CFPB) can be traced to the various issues that led to the great recession, resulting from the bursting of the housing bubble in 2008. Seeking to provide greater protection to consumers, Congress and the President passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) in July 21, 2010.
It was this law that created the CFPB to watch over the interests of American consumers in the market for consumer financial products and services. Dodd-Frank consolidated most federal consumer financial protection authority within the CFPB while giving the bureau the responsibility for supervision and enforcement of the laws over providers of consumer financial products and services that don’t fall under other oversight.
The CFPB is an independent bureau housed in the Federal Reserve charged with regulating a wide range of consumer financial products and services, including credit cards, payday loans, re-loadable gift cards, mortgage servicing and mortgage origination.
Under Dodd-Frank, the CFPB is mandated to propose regulations integrating the consumer disclosures required under RESPA and the Truth-in-Lending Act (TILA). This mandate is what led to the proposed rule released on July 9, 2012.