Yes. Dodd-Frank, the act that created the CFPB, mandates that the fines are deposited into what's called the Consumer Financial Civil Penalty Fund[1].
Money in that fund can be used for only two purposes by law:
1) Compensating victims of the wrongdoing
2) General consumer education & financial literacy programs
The key here is that #1 takes priority by law; #2 only kicks in if the victims are unknown or in a few other edge cases that would make compensation difficult. Victim compensation must always come first. If that drains the fund, #2 never happens[2].
I agree with the others in this thread who have serious problems with regulatory agencies that "self-fund" by using fines to keep the lights on. CFPB doesn't do this -- it cannot do this, even if it wanted to -- and that's what makes it different.
You might remember the debate in Congress over this bill. I was younger then, but still distinctly remember opponents of DF calling for precisely this kind of model during hearings. They were against CFPB receiving operations funding, and frankly I'm glad they didn't prevail. Nobody's issuing excess fines just to keep their jobs for the next fiscal year or levying themselves raises, and consumers get their money back in full. It just seems so reasonable, doesn't it?
>I agree with the others in this thread who have serious problems with regulatory agencies that "self-fund" by using fines to keep the lights on. CFPB doesn't do this
So one of the agencies most likely to go after major corporations don't do this. But the police that go after the little people can? Seems... rigged.
I completely agree that's its the wrong way to do it no matter if you're a regulatory or law enforcement agency. If I had my way, they would all operate like the CFPB.
And this is why I don't understand the opponents who want to tear it down. I understand why some might disagree with the bureau for philosophical reasons, but if we're going to have it, let's do it right.
Money in that fund can be used for only two purposes by law:
1) Compensating victims of the wrongdoing 2) General consumer education & financial literacy programs
The key here is that #1 takes priority by law; #2 only kicks in if the victims are unknown or in a few other edge cases that would make compensation difficult. Victim compensation must always come first. If that drains the fund, #2 never happens[2].
I agree with the others in this thread who have serious problems with regulatory agencies that "self-fund" by using fines to keep the lights on. CFPB doesn't do this -- it cannot do this, even if it wanted to -- and that's what makes it different.
You might remember the debate in Congress over this bill. I was younger then, but still distinctly remember opponents of DF calling for precisely this kind of model during hearings. They were against CFPB receiving operations funding, and frankly I'm glad they didn't prevail. Nobody's issuing excess fines just to keep their jobs for the next fiscal year or levying themselves raises, and consumers get their money back in full. It just seems so reasonable, doesn't it?
[1] https://www.consumerfinance.gov/about-us/payments-harmed-con...
[2] https://www.federalregister.gov/d/2013-10320/p-48