Consumer Bureau asks public: What needs regulated?

{mosads}The Dodd-Frank financial reform law gives the CFPB the power to supervise nondepository institutions like private mortgage, student loan lenders and payday lenders. For other nonbank companies, the CFPB will oversee larger participants, but first must detail how it will define what one is. Now it’s turning to the public for input on that front, and is getting an early jump on it — the “larger participant” rule is not due until July 21, 2012.

In its request for public input, the CFPB suggested six other markets that could fall under bureau supervision, including companies engaged in debt collection, money transmitting, check cashing, debt relief or prepaid cards.

Once larger participants are defined, the CFPB will have the authority to supervise them by conducting examinations or requiring reports on their operations.

However, while the CFPB is forging ahead on the issue, it still will need some help from Congress to begin such supervision — help that does not appear to be immediately forthcoming. That is because the CFPB will not be able to engage in such oversight when it begins work on July 21 unless a director in place.

Under Dodd-Frank, when the CFPB goes live, it will assume various consumer regulatory responsibilities from a handful of other financial regulators, such as the Federal Reserve. While the bureau will be able to begin enforcing those regulations with or without a director at the top, it will not be able to embark on completely new supervisory projects unique to the CFPB without a director in place. First-time supervision of nondepository institutions would fall under the latter category.

For the time being, it appears that getting a director in place at the top of the CFPB is a tall order. Nearly every Senate Republican has announced an intention to block any nominee to head the bureau unless several changes are made to it.