CFPB Head of Enforcement Plans to Root Out Bad Actors

The head cop at the new Consumer Financial Protection Bureau outlined the agency’s initiatives during a speech on Tuesday.

Speaking at the National Association of Attorneys General’s spring meeting, Richard Cordray, the bureau’s head of enforcement, said the agency will protect consumers from unfair, deceptive, or abusive acts and use its authority to go after bad actors in the marketplace.

“Rooting out these bad actors will be good not only for consumers, but also for community banks and other financial companies that are committed to honest dealing and quality customer service,” he said.

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As mandated by Congress, the agency seeks to level the playing field so that bank and non-bank providers of consumer financial products and services can compete freely and fairly.  “And we will be in a great position to do this because, for the first time, there will be one agency with supervisory authority over non-bank providers, as well as all of the nation’s largest banks.”

All of this authority has some in Washington worried and Republicans are working to limit the amount of funding available to the CFPB.  As passed by Congress, the bureau was provided a direct allocation of funding from the Federal Reserve.  But Republicans have been fighting to reduce the funding and pull it out of the Fed so it can be distributed through the appropriations process.  The House GOP passed a spending bill that reduces the Fed’s funding by about 40% to $80 million for next year.

Without that funding, the bureau will have a difficult time overseeing the non-bank sector, which has never been supervised by a Federal agency said Cordray.

“That is why it is so critical that the Consumer Bureau retains its independent funding model, a model that will allow it to respond rapidly and appropriately to legal violations and changes in the marketplace over time,” he said.

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  • One way the agency can prove it is trying to make a level playing field is to insist that Congress eliminate the registered MLO category as well as several other NMLS licensing exempt categories. While many may hold to the observation that the need may not be nearly as great on the reverse side as on the forward, the double standard needs to be removed from the entire mortgage industry.

  • The CFPB with its enormous power will do more damage in the long run than any good. Richard Cordray says this will protect not only consumers but community banks as well.

    Keep in mind, this is the same CFPB that implemented so many regulations on the banking industry that many community banks are going to fail or merge with large banking institutions!

    How are they going to protect so many? In one breath they are going to protect and in another breath they are closing down those that they supposedly are going to protect. You can see what the future holds unless the CFPB is striped of any major funding.

    I know I am redundant but the answer is to repeal the “Financial Regulatory Reform Bill”, then the CFPB goes away entirely.

    The Federal Reserve and the CFBP, quite a combination, corruption at its best!

    John A. Smaldone

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