The U.S. Consumer Financial Protection Bureau will begin supervision of mortgage servicers, payday lenders and student-loan companies in an immediate expansion of its authority under the Dodd-Frank Act, agency Director Richard Cordray said in a Washington speech.
The agency will begin dealing face-to-face with nonbank firms “that often compete with banks but have largely escaped meaningful federal oversight,” Cordray said today at the Brookings Institution in Washington during his first speech since President Barack Obama used a recess appointment to give him the bureau’s top job.
“This is an important step forward for protecting consumers,” Cordray said in a statement on the bureau’s website. “Holding both banks and nonbanks accountable to consumer financial laws will help create a fairer, more transparent market.”
Dodd-Frank, the financial-regulation overhaul that created the consumer bureau, authorizes the bureau to begin immediate supervision of mortgage originators and servicers, private student lenders and payday loan firms once a director was in place, according to the statement. The agency can now supervise these firms “regardless of size,” according to the statement.
In June the consumer bureau began the process that must lead to a proposal by July 21 of this year on precisely which nonbank financial firms will be supervised. The bureau began supervision of the largest banks on July 21 last year, its first official day of work and the first anniversary of Dodd-Frank’s enactment.
Cordray, who ran the bureau’s enforcement unit before being named director, said the agency has taken over “a number of” investigations from other federal regulators that ceded consumer protection roles on July 21. The bureau has also started its own investigations, said Cordray, who was Ohio’s attorney general before joining the agency in 2010.
“Some may be resolved through cooperative efforts to correct problems,” Cordray said of the cases. “Others may require enforcement actions to stop illegal behavior.”
He said the bureau will do its work with “our nose to the grindstone” amid criticism of Obama’s decision to bypass Senate confirmation to put him in the job.
Cordray said Raj Date, the former bank executive who has been de facto head of the bureau since July, will serve as his deputy director.
Kent Markus, who had been Cordray’s deputy for enforcement, will now head up that department, according to an e-mailed statement from the bureau. Markus was previously the chief legal counsel to former Ohio Governor Ted Strickland. He also served as a counselor to former U.S. Attorney General Janet Reno.