The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) proposed on Thursday a rule that would install procedures to supervise nonbanks that may have engaged in activities that pose risks to consumers.[IMAGE]
The CFPB, created by the Dodd-Frank Act in 2010, is seeking to clarify procedures that would be used when examining nonbank activity. The bureau launched its nonbank supervision program in January this year as an extension of its bank supervision authority.[COLUMN_BREAK]
""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 proposed rule defines procedures involved in notifying a nonbank that it is being considered for supervision by the CFPB based on reasonable cause. It also gives the nonbank an opportunity to respond and details how the nonbank can respond and what it is required to provide. Nonbanks would be given a chance to file a petition to end the supervision authority after two years.
A nonbank is established by the CFPB as a company that offers or provides consumer financial products or services but does not have a bank, thrift, or credit union charter. This definition includes companies like mortgage lenders, servicers, payday lenders, debt collectors, consumer reporting agencies, and money services companies. The Dodd-Frank Act grants the CFPB the authority to supervise any nonbank that is or may be posing a risk to consumers based on complaints or other information.
The CFPB released this proposal as a voluntary act to maintain transparency in its procedures. The public is welcome to read about the proposal and leave comments ""at this link"":https://www.federalregister.gov/articles/2012/05/25/2012-12718/procedural-rules-to-establish-supervisory-authority-over-certain-nonbank-covered-persons-based-on.