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With Cordray Director, CFPB Steps Up Nonbank Supervision

The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) made clear Thursday that it will exercise its full authority to supervise a host of nonbank financial entities, with mortgage originators, brokers, servicers, and others in plain view.


The bureau, newly empowered by Richard Cordray's recess appointment Wednesday, offered up a ""video"":http://www.consumerfinance.gov/a-video-message-from-rich-cordray/ in which the new director addressed a virtual audience Thursday.

""Consumers deserve to have someone who will stand on their side, who will protect them against fraud, and who will ensure that they're treated fairly,"" Cordray, introducing himself as CFPB director, said in the video.

""The good news is that we've already gotten started,"" he added. ""Over time, we'll judge the success of our efforts by whether consumers are being treated more fairly and with more clarity and candor in the financial marketplace.""

The bureau also released an 800-plus-page ""manual"":http://www.consumerfinance.gov/wp-content/themes/cfpb_theme/images/supervision_examination_manual_11211.pdf for nonbank examiners detailing their examination procedures, with risk analysis by and large focusing on an entity's volume of business, services and products, and oversight by state regulators.

The CFPB said that examiners will ""generally"" notify nonbank entities about their investigations on and before their arrival onsite, leaving the door open to the potential for unannounced visits and examinations.

The bureau said it would avail itself of any number of data-collecting resources at its disposal, including financial information on hand at any other federal agencies and state partners.


Other resources available to the CFPB already include a number of personnel from seven regulatory agencies and their 18 consumer financial laws, which the bureau arrogated to itself when it went live July last year.

Laws regulating the mortgage industry include the Home Mortgage Disclosure Act, Real Estate Settlement and Procedures Act, and Truth-in-Lending Act, along with their rules, orders, and guidance materials.

""President Barack Obama's"":http://www.whitehouse.gov/administration/president-obama decision to sidestep Congress with Cordray's recess appointment rocked much of the industry Wednesday.

Trade groups came out with withering statements against the CFPB Thursday, with efforts to seek solutions from the courts all but certain.

""To say we are disappointed in the move by the President today would be a gross understatement,"" ""Thomas Donohue"":http://www.uschamber.com/about/management/thomas-j-donohue, president and CEO of the ""U.S. Chamber of Commerce"":https://www.uschamber.com/, said in a statement.

""This controversial appointment is unprecedented, constitutionally questionable, and puts the authority of the director and the validity of the bureau's work in legal jeopardy,"" he added.

He called Obama's decision to make a recess appointment ""a political maneuver that ignores the advice and consent power of the Senate, harms consumers,"" adding that it ""ensures that the CFPB's authority will be challenged and resolved by the courts.""

Obama officials stepped up to counter claims of abuse, with ""_The Hill_"":http://thehill.com/homenews/administration/202567-white-house-very-confident-that-recess-moves-were-legal quoting White House press secretary Jay Carney as saying Thursday that the administration feels ""confident"" that the appointment fell within the appropriate legal parameters.

Donohue cited the chamber's desire ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô in tandem with efforts by Republican lawmakers ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô to alter the CFPB by replacing its director with a five-member commission and roping it into the congressional appropriations process.

""Putting the power to pick winners and losers in the credit markets in the hands of a single individual with a half-a-billion dollar annual budget threatens our economic recovery at the worst possible time,"" he said.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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