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The Consumer Financial Protection Bureau recently released a report on its supervision of non-bank activities.
This document reflects the new normal, in which the federal government has oversight of companies in this space.
CFPB report notes problems uncovered
In the document, titled "Supervisory Highlights," the government agency outlined the various problems it had uncovered at non-bank financial firms including payday lending, debt collection and consumer reporting companies.
As a result of the Dodd-Frank Act, the CFPB now has the authority to scrutinize the following non-banks, regardless of their size:
In addition, the government agency has jurisdiction over credit unions and depository institutions that hold more than $10 billion, as well as their affiliates.
Regulatory sanctions
The CFPB began supervising the financial services industry on July 21, 2011. On Jan. 5, 2012, the organization announced that its non-bank supervision program was operational. The next year, the company got into the swing of things, conducting more than 100 supervisory activities.
The government agency has announced several public enforcement actions. However, what many market participants may not know is that the CFPB has also been active in the non-public space.
The organization noted in its report that its non-public supervisory activities have provided more than $70 million in remediation to around 775,000 consumers. Richard Cordray, director of the CFPB, commented on these developments in a statement. He noted his satisfaction at the positive outcomes the government agency has created for everyday Americans.
"For the first time at the federal level, non-bank financial institutions are subject to supervisory oversight that holds them accountable for how they treat consumers," Cordray said. "The CFPB's oversight of banks and non-banks alike is exposing risky practices and getting results for consumers. We are pleased that our supervision program has been able to return more than $70 million to consumers in recent months."
Financial institutions interested in loan sales might benefit from knowing about the new federal supervision of non-banks. At any rate, market participants need to know that any entity that deals with a consumer loan must be compliance with all aspects of the life of that loan, including its sale.
Garnet Capital Advisors 500
Mamaroneck Avenue, Harrison, NY 10528
(914) 909-1000
info@garnetcapital.comGarnet Capital Advisors 500
Mamaroneck Avenue, Harrison,
NY 10528
(914) 909-1000
