Delay in U.S. Consumer Bureau Authority Spares Non-Bank Lenders
July 21, 2011
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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