Consumer Financial Protection Bureau Seeks Public Comment To Help Shape Nonbank Supervision Program
On June 23, 2011, the Consumer Financial Protection Bureau (“CFPB”) announced a Notice and Request for Comment regarding the expansion of its nonbank supervision program. A copy of the U.S. Department of the Treasury press release can be read here.
Created with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, CFPB, which begins operations on July 21, 2011, was tasked with the responsibility of regulating both banks and nonbank institutions which offer financial products or services to ensure that these institutions comply with federal consumer financial protection laws. Under the Dodd-Frank act, CFPB is authorized to supervise all banks with more than $10 billion in assets as well as all sizes of nonbank mortgage companies, payday lenders, and private education lenders.
Dodd-Frank also grants CFPB the power to regulate nonbank institutions in other consumer financial services markets. However, prior to the expansion of the nonbank supervision program into other financial services markets, the agency must first define by regulation who qualifies as a “larger participant” in the market, thus making them subject to regulation. Dodd-Frank requires that CFPB promulgate its initial rule defining which “large participates” of nonbank consumer financial market services it intends to regulate by July 21, 2012.
In its Notice and Request for Comment, CFPB seeks comments on the six nonbank financial services markets it intends to regulate: 1) debt collection; 2) consumer reporting; consumer credit and related activities; 4) money transmitting, check cashing, and related services; 5) prepaid cards; and 6) debt relief services. CFPB also seeks comment on the criteria to be used to determine whether a company will qualify as a large participate including: 1) the thresholds for inclusion, 2) what data should be used to set these thresholds, and 3) whether a single test or market specific tests should be adopted to determine a large participant. A copy of the Notice and Request for Comment can be read here. The initial comment period will run for 45 days from the date of publication in the Federal Register.
Fuerst Ittleman will continue to closely monitor this issue for the latest developments from CFPB. If you have questions pertaining to how Dodd-Frank and the creation of CFPB will affect your business or how to ensure that your business maintains regulatory compliance at both the state and federal levels please contact us at contact@fidjlaw.com.