In what the head of the ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) called ""an important step in the development of our nonbank supervision program,"" the CFPB officially proposed a rule ""last week"":http://www.consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-proposes-procedural-rule-on-supervising-nonbanks-that-pose-risks-to-consumers/ to establish procedures for the bureau's supervision of nonbank financial entities.[IMAGE]
The Dodd-Frank Act grants the CFPB authority to supervise a nonbank that ""it has reasonable cause to determine is posing a risk to consumers based on complaints or other information it receives,"" according to last week's release from the CFPB.[COLUMN_BREAK]
Banks have been subject to federal supervision for some time, but this is the first time nonbanks will come under the magnifying glass.
While the CFPB will oversee ""large participants"" in some sectors, it has the authority to supervise nonbank institutions of any size in the mortgage industry.
The CFPB defines a nonbank as ""a company that offers or provides consumer financial products or services but does not have a bank, thrift, or credit union charter."" This includes mortgage lenders and servicers.
Under the CFPB's proposed rule, the bureau would notify a nonbank if it is considering supervising it.
The nonbank organization will then have an opportunity to respond in writing or orally.
Supervision may include examinations by the CFPB as well as completion and submission of various reports for up to two years before the nonbank institution may file a petition to cease supervision.
The CFPB noted in its announcement last week that ""the Dodd-Frank Act does not require that the CFPB issue this rule"" but that the CFPB ""is issuing it to be transparent.""
The proposed ""rule"":https://www.federalregister.gov/articles/2012/05/25/2012-12718/procedural-rules-to-establish-supervisory-authority-over-certain-nonbank-covered-persons-based-on is now ""open for comment"":http://www.consumerfinance.gov/notice-and-comment/ through July 24.