WASHINGTON — With its first chief now in place, the new Consumer Financial Protection Bureau will start enforcing rules aimed at reining in abusive mortgage servicers, student lenders and payday-loan companies.
It will be months, though, before the agency can police other areas of consumer finance, such as debt collection and credit-reporting bureaus.
Here's a guide to the powers the CFPB now holds over different categories of companies:
• Nonbank mortgage lenders and servicers: These companies have been subject to existing laws and rules, but the agency was unable to supervise them without a permanent director. With Richard Cordray's appointment, the CFPB can have officials monitor them. That might discourage any from using "robo-signers" to foreclose on borrowers without doing the required paperwork.
• Payday lenders: Companies that make short-term loans to borrowers with weak credit are governed by federal laws such as the Truth in Lending Act, but there has been no federal oversight to make sure they comply. The CFPB can now send examiners to payday firms it suspects of illegal or abusive practices. The agency wants to make sure they disclose the full cost of a loan up front so consumers can make an informed choice.
• Private student lenders: The federal government has been cracking down on for-profit education companies whose graduates can't find jobs and have little chance of repayment. The CFPB can now require these lenders to follow existing rules and write new ones intended to guarantee that they lend fairly.
• Prepaid debit card companies, credit bureaus, money-transfer companies, check cashers, debt-relief services: These companies are subject to federal laws, but they've faced little oversight. The CFPB proposed in June identifying major participants in these markets to make sure they're following the rules. It's unclear when that proposal might take effect.