With President Obama’s questioned recess appointment of Richard Cordray as head of the Consumer Financial Protection Bureau (CFPB), the agency can now implement the full authority of the Dodd-Frank Act, according to BusinessWeek. Dodd-Frank resulted from lawmakers complaining that regulators did not do enough to protect borrowers, and was passed over the objections of many Congressional Republicans. The agency began work July 21 but needed a director to officially supervise and regulate non-bank lenders. The largest banks—those with over $10 billion in assets– came under supervision July 21, and some are currently being examined. Initiatives are already in place to improve disclosure regarding mortgages, credit cards, and student loans, and the streamlining of mortgage applications has begun as mandated by Dodd-Frank. Formal rule-making to examine the activities of non-bank firms—an issue Cordray has named as top priority– will not begin until companies targeted for examination are specified, which may be a matter of months or perhaps a year. However, former Republican Senate aide Mark Calabria tells MHProNews.com in TownHall the so-called “recess appointment” of Cordray—since technically the Senate was not in recess— may be null and void because Dodd-Frank specifies the new director must be “confirmed by the Senate.” Otherwise, the authority remains with the Treasury Secretary and Cordray will not be able to police non-bank lenders, nor enforce those provisions of Dodd-Frank that negatively impact the MH industry. Calabria suggests Obama, a one-time constitutional law professor, is gambling on the constitutionality of his “recess appointment.” He also says there is a legality question in regulating non-bank finance, noting it was not the pay-day lenders and check cashers that led to the credit crisis in 2008; it was the Wall Street bankers, and they are exempt from the CFPB’s scope. In any event, manufactured housing industry lenders and those companies which do ‘buy here, pay here’ lending are cautioned by associations and experts to be prepared for the implementation of the new regulations.
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