Financial reform this week: CFPB pushes ahead with plan for non-bank regulation

Introduction

It may lack an official leader, but the Consumer Financial Protection Bureau isn’t letting that slow its work.

The agency will meet Friday with industry representatives to gather information about how it should define “larger participants” in a half-dozen areas it has targeted: credit bureaus, debt collection, money transmission, prepaid cards and debt relief services.

Under the Dodd-Frank law, the CFPB has until July 2012 to finalize what businesses are “larger participants,” the first step before imposing any reporting requirements and agency examinations. That year-long period is especially important because the law does not permit the CFPB to begin regulating non-banks until it has a director confirmed by the Senate.

Senate Republicans have threatened to veto anyone the Obama administration nominates to lead the new agency, unless the director’s power is diluted. House Republicans have pushed to cut the CFPB’s budget, which is funded by the Federal Reserve.

But even without a fulltime director, beginning on July 21 the CFPB is empowered to send its own examiners into the biggest U.S. banks with assets of $10 billion and to ensure that big banks comply with existing credit card disclosure laws and other existing consumer protection laws. The agency can also finish writing rules that ban “liar loans,” mortgages made by banks without verifying a borrower’s income.

Other Congressional hearings, rulemaking deadlines and events related to the Dodd-Frank financial reform law this week:

Tuesday, July 5

Simpler mortgages – Deadline for public feedback on the Consumer Financial Protection Bureau’s revised prototype versions of document summarizing in simple language the mortgage amount, interest rate, monthly payment, closing costs, and other loan terms for borrowers.

Warren documents demanded – Deadline set by House Republicans for Treasury Department to turn over all documents between Elizabeth Warren, special adviser to the Consumer Financial Protection Bureau, and any state attorney general related to mortgage servicing, foreclosures or a possible settlement with the states.