Smaller lenders who are not quite banks are going to get the once over from the Obama administration’s new bureaucracy — the Consumer Financial Protection Bureau.
The CFPB has all sorts of rules to enforce and they are going to go through the books of lenders with the proverbial fine tooth comb.
It’s all part of the Obama administration’s war on banks. Obama is holding up banks for a $20 billion settlement for faulty foreclosure paperwork processing.
Until now, banks have been regulated by federal agencies, while many nonbank mortgage lenders were regulated only at the state level. The Dodd-Frank financial-overhaul law changed that by creating the federal consumer bureau and giving it power over many nonbank financial firms. Many critics of the firms blamed nonbank mortgage lenders for practices that contributed to the housing bubble and 2008 financial crisis.
“The mortgage market cannot work well for consumers if the spotlight shines only on one part of it, while the rest is left in darkness,” said the bureau’s director, Richard Cordray. “Our supervision program will illuminate the entire marketplace by making nonbanks play by the same rules as the banks.”
Bill Himpler, vice president of the American Financial Services Association, expressed concern about the consumer agency’s plans.
“It does give me some pause,” Mr. Himpler said, adding he is confused about what the consumer bureau is searching for through the examinations. “If you throw everything in but the kitchen sink, it leaves people scratching their heads.”