The federal agency tasked with protecting consumers recently received its first top executive thanks to a recess appointment by President Barack Obama, and is already expanding the scope of the way it safeguards Americans from questionable lending practices.
Richard Cordray, the former attorney general for Ohio, was recently put into the top position for the federal Consumer Financial Protection Bureau by Obama and has immediately worked to expand the number of financial institutions it oversees, according to a report from Bloomberg News. Where before the CFPB focused primarily on credit card and mortgage lenders, Cordray immediately also brought non-bank institutions under its purview.
This includes companies that compete with banks, such as mortgage servicing firms, student loan lenders and payday lenders, which Cordray said had “largely escaped meaningful federal oversight” in the past, the report said. Cordray believes that having the agency keep an eye on these institutions as well as banks will create a more transparent market that will benefit consumers in the long run.
The new oversight will allow consumers to find benefits and more protections whenever they take out a payday loan, try to get a better mortgage rate or borrow money from private student loan lenders, the report said. That is in addition to the way that CFPB already protects consumers’ credit card accounts.
The agency gained full regulatory authority over the lending industry in July, having been created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, but had been operating without a top executive for the first several months of operation. That was because Republican lawmakers staunchly opposed the appointment of anyone – not just Cordray – to head up the bureau. Instead, they wanted it overseen by a bipartisan panel. Obama was forced to use a controversial recess appointment – meaning Congress was out of session – in order to get Cordray the job. Treasury official Raj Date was acting as the agency’s interim leader.
The CFPB was originally monitoring the way lenders dealt with consumers’ credit card debt and worked to create documents that allowed for clearer lending agreements between Americans and financial institutions. In addition, it set up both a hotline and website where consumers could register complaints about questionable lending tactics.