New consumer watchdog launched by Obama administration

President Barack Obama recently launched the new Consumer Financial Protection Bureau, designed to enforce rules to prevent mortgage servicers, student lenders and payday-loan companies from using abusive practices. In the future, the agency plans to police over other areas of consumer finance including debt collection and credit reporting bureaus.

President Obama ignored Republican opposition and appointed Richard Cordray to lead the agency. According to The Associated Press Cordray will work with other officials on making sure mortgage servicers and other financial institutions do not exploit their customers. The creation of the bureau was prompted by the shoddy foreclosure practices discovered with the onset of the mortgage crisis.

Cordray plans to start the watchdog's work by expanding its reach to overseeing practices of non-banks, which has gone unsupervised for some time, the source states. Agency officials are already overseeing big banks and have been trained to examine the practices of non-bank financial firms as well.

The Consumer Financial Protection Bureau will also be setting up a 1-800 hotline for consumers who believe they have been exploited, according to Fox News. Borrowers can call the hotline to check up on a lender to make sure they are getting a fair deal on a mortgage or refinancing.

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