CFPB Says it Will Now Examine Companies Posing “Risk” to Consumers

The Consumer Financial Protection Bureau announced last week that it is proposing a rule to supervise non-banks it deems as posing risk to consumers. 

In addition to its supervision of certain types of financial companies, including all mortgage lenders, the Bureau is now ramping up efforts on the segment of companies it determines somehow pose a risk to consumers of financial products. 

It may determine that risk based on previous activity or consumer complaints, as filed through the CFPB, the agency said. 

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“This is an important step in the development of our nonbank supervision program,” said CFPB Director Richard Cordray. “This proposal allows us to reach nonbanks that we would not otherwise supervise, while providing industry with a streamlined process that is fair and efficient.”

The change will not mean anything for mortgage lenders, which are already under the supervision, but it will go beyond taking a slice of an industry to target companies on an individual basis. Auto lenders, for example, could be deemed as subjecting consumers to risk and therefore falling under CFPB enforcement. 

“It isn’t just that they have this authority,” said Chris Willis, partner with Ballard Spahr LLP. “They are signaling by releasing this rule that they will begin to use this authority. In an exam sense, they will be able to examine a company that isn’t one they already supervise.” 

Written by Elizabeth Ecker

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  • I am sure the CFPB will do some good out there with a rule to supervise non-banks it deems as posing a risk to the consumers.

    However, who is to say what non-bank lenders are posing a risk to the consumer? Can this boomerang on the the entire non-bank industry. Is this a free for all license for the CFPB to play havoc on the mortgage broker and mortgage banker because they don’t fall under a federal charter?

    This can turn out to be the devils undertaking if we don’t watch this with an evil eye.

    Who will be supervising the CFPB for discriminating activities perpetrated on the non-bank industry? My colleagues, this can be very dangerous, even though on the surface of the article, it appears to be a major protection measure for the benefit of the consumer?

    John A. Smaldone
    http://www.hanover-financial.com

  • The CFPB will continue to grab as much power as we let them get away with. If we get a change in administration this election maybe we can get the whole bureau closed or at least defunded.

  • Joe,

    As far as a new election getting the CFPB closed or DE-funded would be very difficult to do. The way to approach the problem is to get the bill repealed. The bill I am referring to is the “Financial Regulatory Reform Bill, commonly known as the Dodd-Frank Bill. 

    When this bill was passed it gave the federal government more power than any other bill in the history of our country. The CFPB, which came from this bill has the power over our entire financial system. The scary part of it is the members of the CFPB have very few people to answer to or be accountable to.

    Your intentions by the statement you made are good, however, the only way to skin the cat is by getting to its claws first! Repeal the bill, cut it off at the knees, this is the only way to solve the problems we have and the problems coming at us like a freight train!!

    John A. Smaldone

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