* CFPB says too little known about private student lenders
* Agency preparing report for Congress on private lending
By Dave Clarke
Nov 16 The new U.S. consumer financial agency
is setting its sites on the private student lending industry,
announcing on Wednesday that it is seeking information on how
to oversee these lenders.
The agency said in a release that "too little is known"
about college student loans made by private lenders as opposed
to those that go through programs run by the government.
"It has been operating in the shadows for too long," Raj
Date, the Treasury Department adviser who is running the
Consumer Financial Protection Bureau, said in a release.
"Shedding light on this industry will benefit students,
lenders, and the market as a whole."
On Wednesday the agency put out a request for information
on industry practices such as loan underwriting criteria,
repayment terms and what efforts are made to prevent defaults.
The agency will seek input from the public and the industry
for 60 days.
Private student lenders include large banks such as
JPMorgan Chase and Wells Fargo and non-banks
like Sallie Mae , the largest U.S. student lender.
Americans owe more on student loans than on their credit
cards, with total outstanding student loans expected to top $1
trillion this year, according to data from the Federal Reserve
of New York.
The 2010 Dodd-Frank financial oversight law, which created
the bureau, requires the CFPB and the Education Department to
produce a report on the private student loan industry by
The bureau is charged with policing markets for credit
cards, mortgages and other financial products.
While CFPB opened its doors in July, under the law it is
restricted from carrying out some of its mission until the
Senate confirms a director to lead the agency.
Until a director is in place, for instance, the CFPB will
not be able to supervise private student lenders that are not
President Barack Obama in July selected former Ohio
Attorney General Richard Cordray to lead the bureau but his
nomination has been caught in the crossfire of a political
fight between Republicans and Democrats over how much authority
the agency should have.
Senate Republicans are promising to block Cordray's
nomination until changes are made to the agency's structure,
such as having it run by a board rather than a director.
Senate Democrats and the Obama administration oppose the
changes, arguing they would weaken the watchdog.
Republicans and banks accuse the agency of regulatory
Democrats praise the bureau as a much-needed check on
lending abuses and say it will give people clearer choices and
more information about the financial products they use.