California Attorney General Rob Bonta this week, along with 20 attorneys general, opposed a Consumer Financial Protection Bureau (CFPB) proposed rule that would limit the CFPB’s authority to oversee nonbank financial services providers. Nonbank providers are part of a fast-growing consumer financial market that provides bank-like services while operating without a banking license, making nonbank financial services companies less regulated than traditional banks. Nonbanks were at the center of the 2008 financial crisis, putting consumers and the financial system at risk due to lack of transparency and regulation. In response, Congress authorized the CFPB to engage in supervision of nonbank entities where there is reason to believe that the companies are posing risks to consumers. The proposed rule imposes haphazard limits on one of the CFPB’s key tools to protect consumers and if passed, would increase the risk of financial harm for millions of Americans, particularly with the increasing move to digital payments and other nonbank financial services. Shortly after taking office, the Trump Administration has engaged in a campaign of destruction and systemic shuttering of the CFPB, threatening catastrophic harm to hardworking families and consumer financial markets nationwide.

“The CFPB was created in response to the failure of regulators to address consumer protection issues that in 2008, led to millions of lost jobs and trillions of dollars in losses for American consumers. Now, the Trump Administration is attempting to gut the CFPB’s ability to do its job, to do the very thing it was created to do,” said Attorney General Bonta. “Nonbank financial services providers have a large and increasing significance to the everyday financial lives of consumers, growing at twice the rate of banking services in the last few years — growth that has happened alongside, not despite of, regulation and oversight of the CFPB. Consumers and businesses, especially those without access to traditional banks, rely on these providers for their financial needs. I urge the CFPB to continue its important work in regulating these nonbank providers and helping protect consumers from catastrophic financial harm.”