Today and tomorrow, we will be meeting with nearly 100 organizations from across the country to hear their views about an important building block for our nonbank supervision program. These groups represent a wide range of interests: consumers, nonbank financial services providers, depository institutions, and others. From the very start, we have made it a priority to receive input from stakeholders and the public, so we will be listening to these organizations carefully. We are also reaching out to the public at large – including you – to gather as much input as we can.
Why are we asking these organizations and the public for their thoughts? Their feedback is vital in defining who is a “larger participant” in certain markets for consumer financial products or services – a key step in building our supervision program.
Some background might help explain why we need to define a “larger participant.” The Dodd-Frank Act, signed into law last year, gives the CFPB the job of supervising large banks and their affiliates and some other types of financial companies – mainly to make sure they follow federal consumer financial laws. Banks, thrifts, and credit unions have been subject to examinations by various federal regulators in the past. Other types of companies providing consumer financial products and services have not. One goal of the law is to protect consumers better by expanding bank-like supervision to nonbank companies, so this is a crucial piece of the CFPB’s work. Many of these nonbank financial companies will be subject to this type of federal oversight for the first time.
Under Dodd-Frank, our nonbank supervision program will be able to look at companies of all sizes in the mortgage, payday lending, and private student lending markets. But for all other markets – such as consumer installment loans, money transmitting, and debt collection – the CFPB generally can supervise nonbanks only if they are larger participants in these markets. Before we begin to supervise them, we need to write a rule within the next year to define who is a “larger participant.”
This is not as simple as flipping through a dictionary, so we want your input on how we should define a “larger participant” in this rule. To take input, we have published a Notice and Request for Comment.
The Notice discusses several issues that arise when attempting to define a “larger participant.” For example, how should we set thresholds and criteria for defining larger participants? What markets should we include in the initial rule? The Notice includes some tough questions on these issues and others, and the public comments we receive will help us write the rule that defines “larger participant.” An open discussion will help us to develop the best rule we can – and help the CFPB make the best use of its resources to protect American consumers.
We appreciate the time that these organizations – and many others – are investing to help us with this key step in establishing our nonbank supervision program. We would like your help, too. Please see the Notice for more information and submit your comments.