Banks Could Profit from CFPB, Says Moody’s

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.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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