The official launch of the CFPB’s nonbank supervision program was the subject of a blog post by Peggy Twohig, the CFPB’s Associate Director for Nonbank Supervision, and Steve Antonakes, Associate Director for Large Bank Supervision. While much of the post rehashes comments made by Richard Cordray following his recess appointment as Director, a few items strike us as noteworthy.
One aspect of the CFPB’s nonbank authority that’s often overlooked is its authority to oversee any nonbank that it has cause to determine, based on complaints or other information, is “engaging, or has engaged, in conduct that poses risks to consumers” with regard to consumer financial products or services. Under the Dodd-Frank Act, such determinations are to be made via orders issued by the CFPB after giving the nonbank notice and an opportunity to respond. In its blog post, the CFPB stated that it will be publishing rules with procedural guidelines for how it intends to implement this authority.
In addition to its authority to oversee nonbanks such as payday and student lenders and mortgage originators and servicers regardless of their size, the CFPB also has authority to oversee any nonbank that is “a larger participant of a market for other consumer financial products or services.” According to the blog post, the CFPB will “very soon” be issuing a proposed rule for identifying which nonbanks will be considered “larger participants.” The blog post also stated that the CFPB’s approach for examining nonbanks will be the same as its approach to bank examinations, including generally notifying nonbanks in advance of an upcoming examination.
All signs indicate that nonbanks will be a primary CFPB focus in 2012.