On June 23, 2011, the Consumer Financial Protection Bureau (“CFPB”) announced that it had targeted six nonbanking consumer financial markets – debt collection, consumer reporting, consumer credit, money transmission, prepaid cards, and debt relief services – that could be classified as “larger participants” and subject to supervision by the CFPB.
The CFPB’s announcement, in the form of a Notice and Request for Comment (“Notice”), was made in preparation for an eventual rulemaking on a key element of the agency’s nonbank supervision program: the statutory requirement to define who is a “larger participant” in certain consumer financial markets.
Under the Consumer Financial Protection Act (the “Act” or the “CFPA”), Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act – the CFPB must issue an initial “larger participant” rule no later than July 21, 2012, one year after the CFPB will be up and running. Once the scope of the nonbank supervision program is established, the operation of the program will be based on an assessment by the CFPB of the “risks posed to consumers in the relevant product markets and geographic markets.”
The Act gives the CFPB authority to supervise, without regard to size, covered persons in the residential mortgage, private education lending, and payday lending markets. The Act authorizes the CFPB to require reports and conduct examinations of such companies.
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