Nearly five years ago, Congress created the Consumer Financial Protection Bureau (CFPB), and its sole purpose was to serve as recovery agent for the American people coming out of the financial crisis. But how effective has the Bureau been in doing its job?
University of Utah law professor and part-time Special Advisor to CFPB Director Richard Cordray, Christopher L. Peterson, provided a track record report on the agency's progress since creation. He found in his evaluation of the CFPB's performance and effectiveness that the Bureau had made several strides toward consumer protection rights over the last five years.
The study, which will be published in the Tulane Law Review, is the result of the author’s independent research and does not necessarily represent the views of the CFPB or the United States.
Peterson noted that from its inception through 2015 the CFPB brought 122 public law enforcement actions that generated over $11 billion in consumer redress and forgiven debts without losing a case.
“The Consumer Financial Protection Bureau’s law enforcement cases put over $11 billion back in consumers’ pockets when they were cheated by financial institutions,” Peterson said. The research shows that in the ten years since the financial crisis, the federal government has created a more proactive, modern financial regulator that is working on behalf of the public interest.
The report also shows that over 90 percent of all consumer relief was awarded in CFPB cases in which the bank or other financial company illegally deceived consumers, and over 90 percent of all consumer relief was awarded in cases where the CFPB collaborated with other state or federal law enforcement partners.
According to Peterson, not one bank has contested a public CFPB enforcement action. The CFPB has also demonstrated the willingness and ability to hold senior managers at nonbank financial companies individually liable for illegal acts. In addition, the Bureau proceeded cautiously in enforcing the Consumer Financial Protection Act’s new “abusive” acts and practices standard.
Peterson reported that CFPB supervision, enforcement, and fair lending staff generated approximately $9.3 million per employee in refunds, redress, and forgiven debts for American consumers in public cases challenging illegal financial practices concluded last year.
“Many people believe that the deck is stacked against middle class families. And there is real reason for concern. But the news out of Washington is not all bad. More than any time in a generation, financial institutions have to think twice before they swindle their customers,” said Peterson.