August 2, 2011
Well, not literally. Moody’s Investors Service, one the most prominent credit rating organizations, states in a new report that the new Consumer Financial Protection Bureau could be the “medicine” needed to steady the financial sector, according to the New York Times. In the long run, Moody’s adds, safer lending policies “could limit future credit and litigation costs for the firms.”
“The stricter policing of consumer lending products and services will ultimately make banks safer by steering them away from riskier products such as subprime mortgages,” the report continues.
The CFPB, which launched last month, will monitor the nation’s 110 largest banks, as well as potentially oversee thousands of payday lenders and mortgage companies.
“Once the bureau gains purview over nonbanks as well, it will level the playing field by applying the same controls and constraints to nonbanks as to banks,” Moody’s also states.
President Obama last month nominated former Ohio AG and current CFPB enforcement chief Richard Cordray to lead the new agency. Click here for more findings from Moody’s report.