Lawmakers in both houses of Congress have re-introduced legislation intended to provide financial compensation to whistleblowers who report offenses involving the Consumer Financial Protection Bureau (CFPB). The legislation would encourage reporting of offensive by allowing the CFPB to grant financial compensation using the Civil Penalty Fund, protecting the whistleblower’s identity, and allowing them to retain independent counsel.
The CFPB is a federal agency that provides protection to consumers in contact and business with banks, lenders, and other financial institutions. The Agency works to implement and enforce consumer financial laws, protect consumers from discriminatory or predatory practices and ensure that bank and lending practices are fair and transparent for consumers.
Current CFPB Whistleblower Reporting Program Lacks Structure
Though the CFPB currently has a whistleblower reporting program, it does not provide protections or compensation in a similar manner to other federal agencies. The new laws, if enacted would enable the agency to offer financial compensation and protections to whistleblowers.
Financial whistleblower awards would be funded by the Civil Penalty Fund which was established through the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The fund currently provides compensation to consumers who have been harmed by violations of CFBP regulations but does not provide awards to whistleblowers. This bill would change that and may encourage more people to be willing to come forward with information about consumer financial offences.
Similar to other federal whistleblower programs, the CFPB bill would direct the Agency to award financial compensation for 10 to 30% of the amount of monetary sanctions imposed as a result of the whistleblower report. It also requires that the minimum amount that will be awarded will not be less than $50,000 or 10% of the total collected sanctions, whichever is greater. The bill also sets requirements for legal representation of the whistleblower and provides for protection of the whistleblower’s identity.
CFPB Bill is Reintroduced
A previous version of the Financial Compensation for CFPB bill was introduced in 2021 and failed to pass but has been reintroduced in both houses of Congress. The Senate bill was co-sponsored by U.S. Sens. Catherine Cortez Masto (D-NV), along with Sherrod Brown (D-OH), Richard Blumenthal (D-CT), Dick Durbin (D-IL), Elizabeth Warren (D-MA), Tina Smith (D-MN), Jeff Merkley (D-OR), and Bernie Sanders (I-VT).
A companion bill was also introduced in the U.S. House of Representatives by U.S. Rep. Al Green (D-TX). U.S. Rep. and House Majority Whip, Tom Emmer (R-MN) also introduced legislation intended to amend the Consumer Financial Protection Act of 2010 to provide for whistleblower incentives and protection.
U.S. Rep. Al Green (D-TX) has stated that “recent bank failures and volatility in the financial system have reaffirmed the importance of transparency and accountability in our economy.”