WASHINGTON — The Consumer Financial Protection Bureau is proposing a brand new rule that will restrict its ability to oversee nonbanks, in accordance to a discover revealed quietly within the Federal Register Tuesday.
The CFPB mentioned it plans to undertake a brand new definition of “dangers to shoppers with regard to the providing or provision of shopper monetary services or products.”
That new definition, the CFPB mentioned, will “bind” the bureau in authorized actions that designate a nonbank individual that’s topic to CFPB oversight.
The new proposed rule, revealed within the federal register with out press outreach, the CFPB mentioned that it might slim the definition of “monetary services or products” to the particular services that Congress charged the CFPB with overseeing.
The bureau can also be asking whether or not “dangers to shoppers” must be thought of violations of shopper legislation, a a lot larger normal than the bureau operated beneath throughout former Director Rohit Chopra’s tenure.
The transfer is the most recent by the CFPB to dramatically restrict the bureau’s authority to police nonbanks and the nation’s largest banking establishments. The bureau mentioned in a briefly public 2025 rulemaking agenda that it might search to tighten requirements round which nonbank corporations might be designated “dangerous” beneath Dodd-Frank part 1024.
It additionally comes amid the Trump administration’s full-scale try to dismantle the bureau. Last week, a federal appeals courtroom dominated towards the CFPB’s union, permitting the bureau’s performing Director Russel Vought to hearth up to 90% of the bureau’s employees.
The proposed rule would end in fewer entities being designated by the CFPB, the bureau mentioned, and can scale back prices for corporations.
“The Bureau expects that beneath the proposed rule it will likely be much less seemingly to designate any specific entity for supervision, all different components being equal,” the CFPB mentioned in its proposed rule. “This would cut back the prices of supervision for entities which may in any other case have been designated. The proposed rule additionally may affect habits for entities that will in any other case have seen themselves as being on the margin of being designated or not.”
The company acknowledged that, whereas the rule modifications would cut back prices for supervised companies, the outcomes for shoppers might be completely different.
“At the identical time, companies could also be extra seemingly to have interaction in conduct that might be mentioned to current some likelihood of hurt to shoppers,” the CFPB mentioned.
