Richard Cordray, the new director of the Consumers Financial Protection Bureau, told CNN Money his top three priorities for the nascent agency. Regulatory fear mongers take note: the CFPB’s priorities shouldn’t pose any threat to any bank doing business in an honest fashion. Of course, perhaps that’s why they’re worried.
According to CNN Money, the agency’s first priority is the “Know Before You Owe” campaign, which seeks to help Americans better understand consumer debt products. Last year the agency’s biggest project out of Know Before You Owe was an effort to simplify federal mortgage disclosure forms, in an effort to make home buying more transparent on the federal government’s end.
The Know Before You Owe campaign was launched in May of 2011, and will also focus on other consumer finance products, like credit cards and student debt.
His second priority, Cordray told CNN, would be to focus on the agency’s newly-vested power to regulate nonbanks — “including student lenders, debt collectors, payday lenders and mortgage originators and servicers,” reports CNN.
This effort, which we covered last week, seeks to level the playing field for banks, which have to compete with underregulated non-traditional banking entities to provide financial services. And these underregulated players in the market are more likely to behave in predatory fashion, harming both big banks and consumers in the process.
And finally, his third priority as head of the agency will be, according to CNN, “holding financial firms accountable when their financial product takes advantage of consumers.” This power is what makes big banks nervous, says CNN, and for good reason.
Should banks find themselves in another Margin Call-type situation, where they will be forced to unload toxic assets on unsuspecting customers in an effort to save themselves, they might have to pay the consequences now that the CFPB’s powers are fully vested. The SEC opted against criminal charges, and has been seeking only fines as a way of exacting punishment.
While the transparency in lending and nonbank regulation are likely good for big banks, this third priority will keep them honest in a way that makes them nervous.