California governor to unveil plan for state CFPB
California Gov. Gavin Newsom is planning to create a powerful state Consumer Financial Protection Bureau with expanded oversight of nonbank financial institutions and added staff to enforce consumer protection laws.
As part of a budget proposal to be released Friday, Newsom is expected to call for a revamp of the current Department of Business Oversight, renaming it the Department of Financial Protection and Innovation, modeled after the federal CFPB.
The state legislature ultimately would have to approve a proposed California Consumer Financial Protection law that would expand the department’s authority and authorize a name change. The plan was first reported by the Los Angeles Times.
Newsom has been a major critic of the Trump administration and the rollback of federal enforcement.
“The federal government’s withdrawal and inaction now leaves Californians vulnerable to predatory businesses and leaves companies without the clarity they need to innovate,” Newsom’s office said in an emailed statement.
A proposed new state consumer protection law would “extend state oversight to important financial services providers not currently subject to state supervision, such as debt collectors,” according to the statement.
The governor's proposal would also set aside $44.3 million in the state’s 2020-21 budget to cover start-up costs for the revamped department’s first three years using current reserves from the DBO.
The revamped department would add “dozens of new staff charged with protecting consumers, vindicating their rights and securing them relief,” the statement said.
The department also would monitor consumer markets “to identify patterns of abuse and major risks to consumers,” the statement said. The department plans to increase and tailor public outreach with teams focused on “veterans, new Americans, and other communities at risk of financial predation.”