We hear a lot of terms that refer to players in the money lending industry. Banks, mortgage lenders, credit card companies, subprime lenders, mortgage brokers, etc.
One distinction we don’t hear a lot about, though, is the one between banks and non-bank lenders. The difference is that banks are subject to much more regulation and oversight, while non-bank lenders are not subject to the same kinds of restrictions.
A recent article (“Real Change: Turning Up the Heat on Non-Bank Lenders“) by Harvard bankruptcy law professor Elizabeth Warren, who is currently serving as the Chair of the Congressional Oversight Panel created to oversee the banking bailouts, draws attention to the importance of making sure these non-bank lenders are not able to scam consumers by working in the gaps between federal and state regulations.
The issue has arisen in response to President Obama’s recent proposal to create a new Consumer Financial Protection Agency, which is an attempt to right many of the wrongs that led to the current economic crisis we’re facing. And as Professor Warren points out, the big business lobby is doing everything it can to squash the creation of the CFPA before it can get out of the gate.
That would be a shame as American consumers are in more need of financial protections than ever right now. Consumers are vulnerable enough as it is in the current economy. Easy pickings for unscrupulous non-bank lenders…unless we make the effort to stop them.
Stay tuned to this issue as its evolution will likely have an impact on bankruptcy filing rates in the future, in New York and across the U.S.
Go to Bankruptcy Lawyer Brooklyn NY to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.
