Four years after Congress created the Consumer Financial Protection Bureau (CFPB) as a tool to help the American public recover from scars left by the economic collapse of the Great Recession, new research from University of Utah law professor Christopher L. Peterson evaluates the agency’s performance and effectiveness as consumer financial civil law enforcement agency that is working to prevent harm — such as predatory lending and other fraudulent practices — from harming consumers.

Peterson’s analysis, Consumer Financial Protection Bureau Law Enforcement: An Empirical Review, draws upon pleadings, consent orders, settlement agreements, press releases and other public documents, to study every public enforcement action announced by the bureau through 2015 based on over 70 variables. Peterson examines whether the CFPB’s law enforcement program is making strides to protect Americans from the financial, mental health and physical harms associated with illegal consumer financial practices.

The CFPB’s enforcement track record

“The Consumer Financial Protection Bureau’s law enforcement cases put over $11 billion back in consumers’ pockets when they were cheated by financial institutions,” said Peterson. 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.”

In his research, which is forthcoming in the Tulane Law Review, Peterson draws upon pleadings, consent orders, settlement agreements, press releases, and other public documents, to study every public enforcement action announced by the bureau through 2015 based on over 70 variables.

The article identifies seven key findings on the bureau’s law enforcement work:

• 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.
• Over 90 percent of all consumer relief was awarded in CFPB cases in which the bank or other financial company illegally deceived consumers.
• Over 90 percent of all consumer relief was awarded in cases where the CFPB collaborated with other state or federal law enforcement partners.
• No bank has contested a public CFPB enforcement action.
• The CFPB has demonstrated the willingness and ability to hold senior managers at nonbank financial companies individually liable for illegal acts.
• The CFPB has proceeded cautiously in enforcing the Consumer Financial Protection Act’s new “abusive” acts and practices standard.
• In public cases challenging illegal financial practices concluded last year, CFPB supervision, enforcement, and fair lending staff generated approximately $9.3 million per employee in refunds, redress, and forgiven debts for American consumers.

Peterson’s research also cites challenges the bureau has faced. He found that to date, the CFPB has not announced any public enforcement actions in the pawnshop industry or against international remittance providers, and has had relatively modest success in the market for payday loans — all industries that affect the financial lives of lower income Americans.

Peterson’s research also states while the bureau has effectively pursued individual liability in nonbank matters, the agency continues to face challenges in holding individual bank employees accountable for illegal activity. Congressional statutes make it more difficult to hold individual bank employees liable for illegal activity. The bureau needs to continue developing the new statutory prohibition of abusive acts and practices. Congress adopted the aforementioned law in recognition of the terrible suffering imposed on Americans through defective financial products in the Great Recession, Peterson’s research states, so deploying a national prohibition of abusive finance to serve the public welfare should remain a top supervisory and enforcement priority for the bureau.

The research come as memories of the Great Recession and its hardships remain fresh in the minds of Americans. Peterson’s research provides a recap of the crisis, in which 9.3 million American families lost their homes to foreclosure or short sales from 2008-2010, and 7.9 million Americans lost jobs. (Today, it’s estimated that 7.5 million families still owe more on their mortgage loans than their homes are worth).   As a result of public outcry after the housing market collapsed, Congress delivered the most transformative financial reform since the 1930s with the Dodd-Frank Wall Street Reform and Consumer Protection Act. Among the changes the laws created was a new Consumer Financial Protection Bureau, which is described as a “21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.”

“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.

Peterson works part time for the CFPB as a special advisor to the director of the CFPB. However, this study is the result of the author’s independent research and does not necessarily represent the views of the Consumer Financial Protection Bureau or the United States.