What Are the CFPB’s Top Priorities?

The newly appointed director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, shared his top three top priorities with CNN Money.  The priorities are: “Know Before You Owe” campaign, policing non-banks and holding financial firms accountable. The U.S. Consumer Financial Protection Bureau was created to regulate consumer protection in the financial services industry.

1. “Know Before You Owe” Campaign

The purpose of the “Know Before You Owe” campaigns is to help consumers understand consumer debt products including all the terms of their mortgage, credit card and student loan agreements. By July 2012, the Consumer Financial Protection Bureau will complete a simplified federal mortgage disclosure form.  It is also working on a one-page financial aid shopping sheet. This sheet will assist students in determining how much student loan debt to take on and repayment plans after graduation. The Consumer Financial Protection Bureau designed a simplified credit card agreement, which is being tested.

2. Policing Non-banks

This involves financial firms that aren’t considered banks (non-banks) such as payday lenders, debt collectors, student lenders, mortgage originators and servicers. Non-banks are not as highly regulated as the banking industry is. Mortgage originators and payday lenders are the Consumer Protection Bureau’s top priorities.

The mortgage industry is a top concern because of the major part played in the recession. The Consumer Financial Protection Bureau will begin sending examiners to mortgage brokers to review their books, using a new set of standards it released recently for mortgage originators.

Because payday lenders charge exorbitant rates and are considered predatory lenders, they are also being targeted by the Consumer Financial Protection Bureau. On January 19, 2012, Richard Cordray held a hearing in Alabama that included payday lenders and supporters. “We came here to listen, to learn, and to gather information on the ground that will help inform our approach to these issues. We are thinking hard about these issues, and we do not have all the answers worked out by any means,” he said.

3. Holding financial firms accountable

The Consumer Financial Protection Bureau plans to hold financial firms accountable that take advantage of consumers with their financial products. It has the power to stop financial firms from selling deceptive products.

“Providers need to know that whether they’re big or small, and whatever market they’re in, they have to follow the law and they have to obey the law,” Richard Cordray said. “They can’t engage in unfair and deceptive and abusive practices.”

The Consumer Financial Protection Bureau is expected to be the consumer watch dog for the financial industry.  Will they be able to be effective and take on these priorities?

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Monitoring, Credit Report, Credit Score, Government, Money & Identity

This post was written by John Ulzheimer