Consumer bureau chief begins supervision of payday lenders

by
January 6, 2012

By Jim Puzzanghera, Los Angeles Times

The new head of the Consumer Financial Protection Bureau wasted little time getting to work, using the agency’s new powers to start supervising payday lenders and other firms outside the conventional banking system.

The bureau’s main goal will be ensuring that consumer loans, mortgages and other financial products are easier to understand, but the new director, Richard Cordray, warned companies that “transparency alone is not enough.”

“The consumer bureau will make clear that there are real consequences to breaking the law,” Cordray said in a speech Thursday at the Brookings Institution, a Washington think tank.

It will be a few weeks before the agency has supervisors ready to go into companies to examine their practices. But the preparations began Thursday, amid cheers from consumer advocates and others who have pushed for mortgage brokers, debt collectors and others to face the same federal oversight as banks.

“There’s a new sheriff in town,” said Bill Bartmann, chief executive of CFS II, a debt-collection company in Tulsa, Okla.

The industry is rife with abuses, said Bartmann, who supports the new federal regulation. He cited, for instance, firms that immediately take consumers to court instead of trying to work out a repayment plan.

“Most of the debt-collection industry is filled with scoundrels and scalawags who are abusing consumers right and left,” Bartmann said. “I would like the bad actors to go away because they give all of us a bad reputation and they’re hurting people.”

The industry is ready to work with Cordray, and representatives met last year with bureau staff, said Mark Schiffman, a spokesman for ACA International, a trade group for debt-collection companies. Debt collection “is not an easy job to do, but it’s essential for our economy,” he said.

“We’re not making excuses for any bad behavior,” Schiffman said. “We believe debt collection can and should be done following state and federal guidelines.”

The consumer bureau now is allowed to regulate debt collectors and many other companies because it finally has a director.

To read more, visit: http://www.chicagotribune.com/business/ct-ficordray-consumer-20120106,0,5221150.story

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