Today American Banker is reporting that banks are worried they’ll face excessive scrutiny by the new proposed consumer products regulator compared with other types of financial services providers. In the article, bankers argued that non-bank lenders, such as mortgage companies and payday lenders, which would also fall under the purview of the regulator, would be too hard to identify and track. Examiners would want to stick to what they knew—banks, which would be easier to find and monitor.
The universe of financial service providers certainly is large. The American Bankers Association has compiled a list of 41 different kinds of companies whose products and services would qualify for supervision by the new regulator. At first glance it seems that banks, with their yearly examinations and dedicated regulatory agencies, would make the easiest targets for scrutiny.
But non-banks are piping up—they don’t want to lose any street cred among the overregulated—with helpful information about how they’re categorized, represented and regulated.
Mary Jackson, the senior vice president for corporate affairs at Cash America International, a company that operates pawn brokers and payday lenders in a number of states throughout the U.S., pointed out that the company has 3,800 licenses, constant audits and a chief compliance officer with a staff of three. She said the slew of recent mentions her company’s businesses have received in public debate fails to account for the compliance duties her company already faces. “It acts like we’re all out there freewheeling and we’re not,” she said. In some cities, pawn brokers and payday lenders face not only state but also municipal registration and audits.
Jackson admitted that there’s no national regulatory framework for pawn shops or payday lenders. And the industries want to keep it that way. “We are concerned there would be too much decisionmaking with a bureaucratic authority without us having much control over it,” she said.
Still, it’s hard to compare the oversight of Cash America, which has a market cap of nearly $782 million but which Jackson says has spent a total of just $700,000 on compliance with regulations in the Gramm-Leach-Bliley Act, to that of banks, which spend millions on compliance. The message to both banks and non banks seems to be that in fear of more regulation, no one is alone.