The Consumer Financial Protection Bureau: Financial Regulation for the Twenty-First Century

After existing regulatory systems failed to prevent the recent financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, a sweeping reform designed to alleviate the crisis and prevent its recurrence. Out of this Act, the Consumer Financial Protection Bureau was born. This new agency is charged with making markets for consumer financial products and services work for Americans, a task that was previously spread out among seven different federal agencies with varying priorities. This Article describes, with a series of concrete case studies, four key principles that have guided the Bureau as it strives to fulfill Congress's mandate. First, the Bureau has taken a market-based approach that reflects its belief in the power of markets and competition to produce increasingly better outcomes for consumers and responsible providers alike. Second, recognizing that understanding a market well is essential to effective regulation, the Bureau has relied on evidence-based analysis to inform all of its activities. Third, the Bureau has complemented its empirical analysis with input from all segments of the public—including consumers, advocates, and regulated entities. To facilitate the kind of robust public participation that will make for more effective regulation, the Bureau has employed innovative technologies and strong transparency policies. Finally, the Bureau has studied and learned from historic regulatory experiences and has adopted best practices from the public and private sectors. These four principles, and others which cascade from them, define the Bureau's twenty-first century approach to promoting a well-functioning market for consumer financial services and effective consumer protection.