CFPB Raises Its Budget And Extends Oversight Duties

consumer watchdog supervise credit reporting agencies

The Daily Finance reports that on Wednesday the director of Consumer Financial Protection Bureau, Richard Cordray, made an announcement during the congressional testimony. He stated that next year the agency is planning to spend $448 million – that is an increase of 26 percent from its budget for 2012 that comprises $356 million.

Meanwhile, the CFPB made a proposal related to the draft rule that would let the agency supervise credit reporting companies and large debt collectors – these two sectors belonging to financial industry have been actually ignored by the US government until now.

Agency Widens Its Duties

In fact, Richard Cordray didn’t specified the way the bureau was going to spend those extra funds while appealing before the House Financial Services Committee. He just mentioned that this budget is meant to make the life of American consumers better. The real thing is the consumer watchdog will widen its oversight duties covering nonbank financial institutions more extensively. The Dodd-Frank Act highlights that the original mandate of the CFPB is to supervise the providers of student loans, mortgages and payday cash loans. Nevertheless, on July 21, 2011 the agency started to oversee banks with assets over $10 billion.

Subjects To Supervision Process

Cordray emailed a statement to the media outlets explaining that the proposed rule would allow to consider the credit reporting companies and debt collectors which qualify as bigger participants as the subjects to the same supervision process applied to the banks. Basically, the supervision in this very context means examining of the companies’ records for evidence of law violation, particularly the violation of the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.

Consumer reporting companies like Equifax and Experian are the agencies which generate reports on credit history and credit scores. Thus, their operations are of critical importance to American consumers who actually need high scores to negotiate favorable loan terms. The consumer watchdog will have enough power to supervise nearly 30 such agencies – that is over 90 percent of the industry’s profit.