CFPB Launches Rulemaking To Supervise Nonbanks

On May 24, 2012, the Consumer Financial Protection Bureau ("CFPB" or "Bureau") proposed a rule that will set up a process to supervise nonbanks that may have engaged in activities that pose risks to consumers. The CFPB is authorized to require reports from and conduct examinations of nonbanks subject to its supervision.

CFPB Director Richard Cordray said in the Bureau's press release that "[t]his proposal allows us to reach nonbanks that we would not otherwise supervise, while providing industry with a streamlined process that is fair and efficient."

The proposed rule sets out procedures to notify a nonbank that it is being considered for supervision because the Bureau may have reasonable cause to determine that it poses risks to consumers in connection with offering or providing a consumer financial product or services.