InfoBytes Blog
CFPB Launches Nonbank Supervision Program
On January 5, the CFPB announced the launch of its nonbank supervision program. With a Director now in place, the Obama Administration believes that the CFPB can now exercise authority granted to it by the Dodd-Frank Act to supervise companies that offer or provide consumer financial products or services, but that do not have a bank, thrift, or credit union charter. (Republican senators have expressed disagreement; in their view, the Dodd-Frank Act grants that authority only when a CFPB Director has been confirmed by the Senate.) Nonbank supervision will proceed in two phases, with immediate focus on nonbank mortgage, payday lending, and private education companies, regardless of such a company's size. A second phase will expand supervision to large debt collection, consumer reporting, auto financing, and money-service businesses. The CFPB expects soon to propose a rule defining "larger participants" in those second-phase markets, a predicate to exercising its supervisory authority over such institutions. The CFPB also noted that it may supervise any nonbank whose conduct poses risks to consumers with regard to consumer financial products or services. Rules describing procedural guidelines for exercising that authority will be published in the future.