The summer of 2010 marked the advent of the Consumer Financial Protection Bureau. Created by Title X of the Dodd-Frank Act, the new administrative entity was touted as an innovative answer to the regulatory failings that led to the financial crisis of 2007-2008. Its mission is “to protect consumers from abusive financial services practices.” While the CFPB’s success in fulfilling its mission is open to debate, it cannot be denied that the CFPB has been successful at growing.
In July of 2011, the CFPB opened for business with a planned staff of fewer than 500 employees. By the end of 2012, it had 970 employees, growing to 1,334 by 2013, and 1,443 in 2014. Currently, the CFPB has more than a dozen positions advertised on its website and through the federal government’s usajobs.gov website. The increase in staff has been cited by the CFPB as one reason for the massive renovation of their headquarters.
That growth is only part of the story. The CFPB spends more on hiring contractors than it does on payroll — $200 million for contractual services in 2014, compared to $171 million on salaries. Currently, 21 contracting positions are being advertised across the country. Other contracts of note include a data mining operation involving Argus Corporation that will pay out $15 million by 2017, $8.5 million to Experian for analyzing credit report data, and $5 million to Deloitte for custom software.
In terms of funding, transfers to the CFPB from the Fed (which are capped by Dodd-Frank at a pre-set percentage of the Fed’s budget) increased from $162 million in 2011 to $534 million in 2014. The CFPB’s most recent annual report indicated that it had $112.8 million in funds available in its Civil Defense Fund for future allocation to harmed consumers and/or financial education. Deposits into the Civil Defense Fund grew from $49.5 million in 2013 to $77.5 million in 2014.
In addition, a veritable cottage industry has grown up around CFPB compliance in the financial industry. Every new rule promulgated by the Bureau comes with the threat of fines and penalties. Standard mortgage forms have been changed, which has required approved reprinting. Lending rules have been changed, as well as the disclosure requirements for lenders. This has, in turn, required the reprogramming of software and online tools. Some of the largest law firms in the country have opened divisions specific to CFPB compliance. As the burden of CFPB compliance has been passed down, everyone from the CEO to the teller has been required to seek augmented training. The CFPB has aided the development of this niche compliance industry by publicizing the top six ways regulated entities run afoul of CFPB regulation.