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Monday, May 7, 2012

Nonbank Regulations a Priority for the CFPB

Broadening the regulatory structure to include federal oversight of nonbank firms is a CFPB priority, Director Richard Cordray said last week at a conference hosted by the University of Rochester’s business school in New York.
[I]t is notable that we are the first federal agency authorized to supervise nonbank players such as mortgage originators, mortgage servicers, payday lenders and private student lenders. We can also supervise ‘larger participants’ in other nonbank markets. There are tens of thousands of these nonbank firms, and their products affect virtually every American.
He cited the mortgage market meltdown as an example of how a partial and incomplete regulatory scheme was doomed to fail.
Banks, thrifts, and credit unions were subject to explicit oversight, whereas many other mortgage market participants, such as lenders and brokers and originators, were held to no standards of accountability at all.

Through our oversight, we are working to level the playing field and make sure that these [nonbank] businesses are playing by the rules and being held accountable for their actions.
Read Cordray’s speech.

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