Delay in U.S. Consumer Bureau Authority Spares Non-Bank Lenders

Reuters
July 21, 2011
Knutson, Ted

A deadlock between Republicans and the White House over the Consumer Financial Protection Bureau's structure and director nominee are preventing the agency from regulating payday and other non-bank lenders. Republicans have said they will block any CFPB director nominee until the bureau is modified and, without a director, the watchdog is unable to regulate non-bank lenders. Such firms insist that they have a other regulations to keep them in check, including the Truth in Lending Act and the Real Estate Settlement Procedures Act, and that they are shoring up their disclosure standards. But Jean Fox of the Consumer Federation of America says she sees no evidence that payday lending products are being modified ahead of potential CFPB action. She concedes that tougher state regulations have prompted the industry to make some changes but says lenders recovered the cost of lost revenues and profits through fees. "The net effect has been zero," according to Fox.
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