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Supervision

Our proposed rule on student loan servicers

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In case you missed it, yesterday Director Cordray announced our proposed rule on student loan servicers.

As so many families are all too aware, the cost of higher education has been steadily rising in recent years. As a result of these rising costs, more consumers need loans in order to afford college. By the end of last year, outstanding student loan debt was more than $1 trillion.

Managing that debt can be complicated for borrowers – especially for those who encounter problems with their loan servicers. Loan servicers are responsible for collecting payments from borrowers on behalf of loan holders. A servicer is often different than the lender itself, and a borrower has no control or choice over which company services a loan. We have heard complaints from private student loan borrowers that nobody holds servicers accountable for answering their questions and providing quality customer service. So students can find themselves at a dead end – stuck without a clear path forward.

The decision to take out student loans may be the first major financial decision for many of these borrowers. We do not want to see their college degrees become more burden than blessing. But many students are saddled with debt and may believe they have few options to make their debt more manageable and affordable. With the challenges they face in the current economic environment, they can be precluded or delayed in pursuing other financial opportunities like getting a mortgage or saving for retirement. Given the rapid growth of this market and the recent rise of delinquency rates, it is important to ensure that borrowers receive appropriate attention from their servicers.

Today we are proposing a rule that would allow the Consumer Bureau to supervise nonbank student loan servicers for compliance with federal consumer financial laws.

Read the rest of Director Cordray’s remarks.

Come be our ‘boots on the ground’ – join our supervision team!

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We’re recruiting examiners – our “boots on the ground” within our supervision team – to work daily with large banks and nonbank companies to ensure compliance with consumer financial protection laws and to promote a market for fair, transparent, and competitive consumer financial products and services.

Apply before midnight on Friday, March 22.

Our consumer-centered approach to supervision is based on three main principles:

  • Focus on risks to consumers in the policies and practices of consumer financial providers,
  • Analyze available data on the activities of providers, on the markets where they operate, and on the risks to consumers, and
  • Apply consistent standards in supervision of both bank and nonbank consumer financial companies.

You would work from a home office in the city of your choice. Typically, you would be near a major travel hub or airport, and travel to the companies you supervise about 80 percent of the time.

The day-to-day work involves reviewing and analyzing data, conducting on-site exams, and being in regular communication with the companies you supervise and other regulators, as well as follow-up monitoring.

In their own words, here’s what some current examiners have to say about working here.

Nicole Salemno, Examiner, Northeastern Region:

You should apply because we need you. This is not a job where you will sit back and ‘learn the ropes.’ Rather, you will be given every opportunity to exercise your unique strengths. You will learn and grow, but your active participation will be expected from day one.

Micah Robbins, Examiner, Northeastern Region:

The competency and dedication of employees in this bureau is refreshing and reaffirming. You get to make a visible difference in the consumer landscape.

Heidi White, Field Exam Manager, Midwest Region:

Candidates should apply who want to make a difference, work hard in a team environment, and embrace the goals and mission of the agency. In return, candidates receive excellent job benefits, challenging work assignments, opportunities for career advancement, and the satisfaction of knowing they had the ability to impact millions of consumers.

If you’re interested in joining us, you have until midnight, Friday, March 22 to apply.

Lindsay Bacon is part of the Talent Acquisition team of the Office of Human Capital.

Realigning our supervision work

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Today we’re announcing the reorganization of our Headquarters staff for Supervision. We will continue having two Supervision offices at Headquarters, but now we will have one focusing on examinations and one focusing on policy. This realignment is consistent with our mission to protect consumers across financial services markets without regard to the charter of the provider.

Until now, our Headquarters staff has been organized into offices for Nonbank and Large Bank Supervision. The previous arrangement made sense while the Bureau was starting its work, as we had two distinct supervisory mandates. In July 2011, we assumed the existing supervisory authority for consumer compliance from other federal regulators over large banks, thrifts, and credit unions. Our Large Bank Supervision team established the program that carries out this authority. Starting in January 2012, our Nonbank Supervision team built the first federal supervision program of its kind for nonbank entities, such as payday lenders and nonbank mortgage firms.

We have now successfully launched supervision programs for both nonbanks and large banks. Now our goal is to make these programs as efficient and effective as possible, and this reorganization will help us do that. We are reorganizing into two teams: the Supervision Examinations team and the Supervision Policy team.

The Examinations team will focus on many of the processes and work vital both to the team at Headquarters and to examiners throughout the country. The team will oversee our efforts to: recruit, train, and commission examiners; ensure policies and procedures are followed; and plan and execute examinations appropriately in light of our resources and priorities. The four regional offices will report to Supervision Examinations, and Paul Sanford will be the Acting Assistant Director of this Office.

The Policy team will ensure that policy decisions for supervision are consistent with both the law and our mission, and that they are consistent across markets, charters, and regions. We are organizing this office by product or service market rather than by the type of financial institution. Each of these teams will be responsible for developing supervision strategy and policy across both bank and nonbank markets. Peggy Twohig will be the Assistant Director of this Office.

Our goal has always been to have one cohesive supervision program, and this is another step in that process. All along, our regional examination staff has covered both nonbanks and large banks. This new organization will lead to a better and more coordinated approach to the markets we supervise and a sharper line of sight across both banks and nonbanks. Supervision is one of the Bureau’s key tools to ensure compliance with federal consumer financial law. Better coordination and visibility will help us better fulfill our mission.

Hearing your stories on payday lending

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Today, the Consumer Financial Protection Bureau traveled to Birmingham, Ala., for our first field hearing. We gathered to discuss and collect information on payday lending. The payday lending market is a multi-billion dollar industry in the United States, and Alabama has one of the largest concentrations of payday lenders in the country. (more…)

The CFPB launches its nonbank supervision program

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A Beginning

Today marks an important step forward for the CFPB as we work to protect consumers. Going forward, the CFPB will expand its bank supervision program (which began last July) to nonbanks, ensuring that banks and nonbanks play by the same rules.

Before we get ahead of ourselves, it makes sense to remember what a nonbank actually is. (more…)