Title X Overview: Bureau of Consumer Financial Protection

American Bankers Association Contacts

Rich Riese  (202) 663-5051
Virginia O'Neill (202) 663-5073

Ken Clayton (202) 663-5337 (Preemption/Interchange)
Vincent Barnes (202) 663-5230 (Interchange/Student Loans/Farm Credit)

Dechert LLP Authors

Thomas P. Vartanian (202) 261-3439
Robert H. Ledig (202) 261-3454
David L. Ansell (202) 261-3433
Corey F. Rose (704) 339-3164

Preemption Section Author
Raymond Natter, Barnett, Sivon & Natter, (202) 463-6040


Summary

Title X establishes the Bureau of Consumer Financial Protection ("Bureau"). The establishment of the Bureau, and the nature and extent of its responsibilities and activities, were some of the most controversial aspects of the Act. Concerns were raised that the creation of a regulatory entity that would be solely focused on consumer protection might not give sufficient attention to the impact of its actions on the safety and soundness of financial institutions that provide products and services to consumers. Concerns were also raised that actions by the Bureau intended to protect consumers could have the impact of restricting the availability and terms of credit and other products and services offered to consumers.

Under the structure created by Title X, the Bureau will gain exclusive rulemaking authority over a wide range of Federal consumer protection laws. This authority could, in limited circumstances, be overruled by the Oversight Council.

The Bureau's rulemaking authority extends to a broad range of providers of financial products and services. However, the Bureau's authority for examination, supervision and enforcement is shared with several prudential regulators. The Bureau has primary supervisory and enforcement authority over certain nondepository institutions (principally those in the mortgage business and large providers of consumer financial services) and depository institutions with more than $10 billion in assets and their affiliates.

The Bureau's new powers over consumer financial activities include authority to: prohibit practices that it finds to be unfair, deceptive or abusive; in addition to the broad rulemaking activity under various consumer statutes, to mandate particular disclosures; and to prohibit or restrict pre-dispute arbitration practices.

Depending on the approach taken by the Bureau, Title X has the potential to have a very significant impact on what consumer financial services will be available in the U.S. and the manner in which they will be provided.

Title X increases the potential for State intervention in the operations of Federally chartered depository institutions by creating new procedural hurdles to preemption determinations while also potentially narrowing the circumstances in which preemption of State law may apply. Moreover, the Title provides statutory recognition of a role for state law enforcement authorities in regard to Federally chartered depository institutions. The extent to which this legislation affects current preemption law will take many years of litigation to resolve.

The Bureau has responsibility for mortgage reform and enforcement as set forth in Title XIV, the "Mortgage Reform and Anti-Predatory Lending Act."

Finally, Title X includes a provision that limits interchange fees for debit card transactions (including those involved with certain prepaid card products) to an amount that is deemed to be reasonable under regulations issued by the Fed, subject to certain exemptions. It likewise establishes new "rules for the road" with respect to certain processing and card network practices.

The following links provide expanded analysis within this section: