Responding to a request for comments on the scope of the CFPB’s supervision of nonbank financial companies, the banking community and its trade groups, while still concerned about the existence of the Bureau itself, have pressed for a very broad definition of “larger participants” in six credit-related nonbank sectors. These comments mirrored those of consumer groups that are advocating for an expansive definition to include a wide-ranging array of financial-related companies, from companies doing background checks to manufactured housing lenders and debt relief agencies.
The banks’ goal is to level the playing field so their nonbank competitors are equally regulated and supervised by the Bureau. Arguing that any nondepository entity materially engaged in the business of consumer financial products and services should be deemed a “larger participant” subject to Bureau supervision, the banking and consumer communities are seeking vigorous supervision and regulation of these entities.
Other groups representing nonbank entities called for a more limited definition of nonbanks that will be subject to CFPB supervision. Some commenters expressed their belief that without having a director in place, the Bureau overstepped its authority by requesting comment on this nonbank issue, because they believe that the director should oversee all phases of the rulemaking process in connection with nonbanks. Without an approved director in place, the Bureau may not prescribe rules (1) defining the scope of nondepository institutions subject to the Bureau’s supervision, (2) prescribe recordkeeping requirements for such institutions, or (3) supervise nonbank entities.