Richard Cordray and the CFPB set to work
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Adriene Hill: Today is the last day to submit public comments to the Consumer Financial Protection Bureau on private student loans. As part of Wall Street reform, the government is looking at predatory lending practices. The agency has a new head with a new set of priorities.
Richard Cordray was appointed by President Obama earlier this month. He joins us now. Thanks for being here.
Richard Cordray: My pleasure.
Hill: So the first public probe from your office is into mortgage insurance and illegal kickbacks. Can you tell me more about what is at the top of your agenda in this new role?
Cordray: Number one, we are going to continue with our already fairly robust “Know Before You Owe” program, to try to simplify the terms and the statements that consumers have about credit card agreements, about mortgages, the home loan application that you fill out when you go to get a mortgage and about student loans. Second, we have launched our non-bank supervision program —
Hill: Let me just jump in here and ask, can you explain what a “non-bank” is? And why it’s a priority?
Cordray: Sure, it’s any institution that’s offering a financial product or service, such as a mortgage or a student loan or a payday loan or check cashing service, but does not actually have a bank charter. To a consumer, that’s often not obvious. The non-bank might call itself a finance company or something like that. To most of us, well that sounds very similar to a bank. But it might be subject to no regulation and therefore might be quite unscrupulous. So, you can’t have a market in which some people are regulated and some people aren’t — it doesn’t work.
Hill: Now, we keep hearing how tight credit is in the country right now and that it’s slowing economic growth. Is there any chance that investigations from your office could exacerbate that problem?
Cordray: I think that frankly, if you look at tight credit in this country, the main reason it’s tight is because we had a financial meltdown; the financial meltdown was caused by the fact that you had markets that were partly regulated, partly unregulated. Tthey didn’t work, and it led to a catastrophic economic ruin for many people in this country. If we can avoid that in the future, that’s the best thing we can do to get the credit markets working for the long-term and on a sustainable basis.
Hill: Richard Cordray heads the Consumer Financial Protection Bureau. Thanks so much.
Cordray: My pleasure, thank you.