WASHINGTON (Reuters) - The new U.S. Consumer Financial Protection Bureau on Thursday began seeking input on how it should police financial products like prepaid cards and consumer credit reports that are provided by companies outside the banking industry.
The Obama administration has touted the bureau’s ability to oversee loans and other financial products sold by non-banks as a key to reining in the “shadow banking” industry that previously had not been heavily regulated.
The bureau on Thursday issued a request for comment on how it should define what companies outside of the banking industry will fall under its supervision.
“The CFPB will be able to examine companies that have never been subject to federal oversight to ensure that no one is gaining an unfair advantage by breaking the law,” Harvard Law Professor Elizabeth Warren, who is setting up the bureau for the Obama administration, said in a release.
The bureau officially opens for business on July 21.
The bureau has identified six markets that could be targeted, which include providers of prepaid cards; companies that help consumers send money to family or friends in other countries; credit bureaus that provide information on a consumer’s credit-worthiness; and debt collectors.
The 2010 Dodd-Frank law created the bureau and makes clear it will supervise banks with more than $10 billion in assets as well as payday lenders and non-bank providers of home and student loans.
The law leaves it to the bureau, however, to define other “larger participants” in consumer financial markets that should be supervised.
The request for comment issued Thursday seeks input on who should be defined as a “larger participant.”
How many companies will fall under this definition is unclear, a senior bureau official told reporters on a conference call.
The official estimated it could be anywhere from tens to hundreds of thousands.
A rule laying out specifically who will be supervised and how is not due until July 2012.
The bureau is seeking comment on issues such as what thresholds should be used to determine whether a company will be supervised and what data should be used to set these thresholds.
Banks opposed the creation of the bureau and argue it could lead to fewer loans and other financial products being available to consumers.
Warren and other officials have touted the agency’s ability to police non-banks as a good thing for the banking industry.
(Reporting by Dave Clarke, editing by Matthew Lewis)
This story was corrected to remove reference to a proposed rule, makes clear that bureau simply requested comment