| July 16
July 16 The U.S. consumer watchdog agency said
o n M onday it will start closely supervising credit reporting
companies in September, bringing the industry under strict
federal supervision for the first time.
The Consumer Financial Protection Bureau, in adopting a rule
to oversee the companies, said the industry has a tremendous
influence over Americans' financial well-being.
"Credit reporting is at the heart of our lending systems and
enables many of us to get credit, afford a home, or get an
education," CFPB Director Richard Cordray said in a statement.
"Supervising this market will help ensure that it works
properly for consumers, lenders, and the wider economy," he
About 30 such companies that take in more than $7 million
each year will be subject to federal supervision under the
CFPB's new rule.
The consumer watchdog agency said it was given the authority
to oversee larger businesses in this market by the Dodd-Frank
financial oversight law Congress passed in 2010. The law also
created the CFPB, which officially opened in July 2011, and gave
it authority over consumer products such as credit cards.
The agency first proposed in February to supervise credit
reporting agencies and debt collection companies. It was the
agency's first proposed rule under its authority to regulate
"larger participants" in consumer financial markets.
Cordray said at the time that those industries were chosen
because of the increased role they are playing in consumers'
lives after the 2007-2009 financial crisis.
The CFPB said there are about 400 consumer reporting
agencies in the United States, but the 30 companies it plans to
oversee take in about 94 percent of the sector's annual revenue.
The largest companies in the industry are Equifax,
Experian and TransUnion.
The companies will face reviews of compliance systems and
procedures and on-site examinations, and they will have to
produce reports for regulators, the CFPB said.
The agency said consumer reporting to date has been subject
only to law enforcement authority at the federal level, with
several agencies sharing responsibilities for writing rules.
This meant no single federal agency could fully see how the
companies operated. The three largest issue more than 3 billion
reports each year and keep files on more than 200 million
Americans, according to the CFPB.
The watchdog also will post questions and answers about
credit reporting on its website ()to
help consumers determine what to look for in credit reports and
how to dispute errors.
The agency expects to finalize its debt collection rule this