Govt to Supervise Credit Reporting: Good for Consumers?

Government loves to help consumers, but sometimes its intentions go awry and lead to regulations that end up hurting consumers. The newly created Consumer Financial Protection Bureau said it will supervise the private companies who provide credit reports. This will give them regulatory and licensing power to punish or restrict credit agencies who do not comply with the CFPB's policies.

The CFPB does not require legislation to create policies. Its unelected officials have the power to create guidelines. CFPB director Richard Cordray said the bureau will also extend its oversight to "...focus on payday loans or checking accounts, as well as resellers of credit reports and those that analyze credit report information."

Jon Ulzheimer, president of consumer education at SmartCredit.com, said, "But what exactly constitutes a reasonable investigation? The act doesn't say." Ulzheimer worries that the bureau will use its vague powers to conduct unreasonable investigations, which hurt the credit reporting business and therefor hurt consumers applying for credit.

The Obama administration created the controversial CFPB in 2011. Senate Republicans refused to approve of the nominee because of their objection to another regulatory agency. They oppose a larger federal government bureaucracy and more regulations during a recession, which they believe could further jeopardize a recovery.

AP reports: The Consumer Financial Protection Bureau said Monday that it will start supervising the 30 largest firms that make up 94 percent of the industry. That includes the three big credit reporting firms: Equifax Inc., Experian and TransUnion.