REUTERS SUMMIT-US consumer watchdog says committed to stiff penalties

By Emily Stephenson

WASHINGTON, Oct (KOSDAQ: 039200.KQ - news) 23 (Reuters) - The head of the top U.S. consumer financial watchdog said his agency is committed to going after individuals, not just companies, when it punishes wrongdoers, reflecting a broader effort among enforcement officials to ensure penalties have real bite.

Richard Cordray, director of the Consumer Financial Protection Bureau, told the Reuters Washington Summit on Wednesday that the agency also is seeking admissions of wrongdoing from bad actors who commit egregious violations.

"I've always felt strongly that you can't only go after companies. Companies run through individuals, and individuals need to know that they're at risk when they do bad things under the umbrella of a company," Cordray said.

Some regulatory agencies have revamped the way they handle enforcement actions, partly in response to pressure from lawmakers to crack down more aggressively on financial misdeeds.

Senator Elizabeth Warren, a Massachusetts Democrat who set up the consumer bureau before running for Congress, has urged regulators to go after individuals, rather than only settling with companies, and to demand admissions of fault.

In two separate high-profile settlements, the U.S. Securities and Exchange Commission required JPMorgan Chase and Philip Falcone and his firm, Harbinger Capital Partners (Frankfurt: A0JJY6 - news) , to admit to wrongdoing.

In September, SEC head Mary Jo White said she has urged enforcement lawyers to look long and hard at company officials during their investigations.

The Commodity Futures Trading Commission also got JPMorgan to admit wrongdoing in a settlement last week.

Cordray said the bureau would do the same in some cases.

"There are times when that makes sense, times when it makes less sense. It's very much a case-by-case matter," he said.

POLITICAL PRESSURE EASING

Congress created the bureau in the 2010 Dodd-Frank law and gave it authority over mortgages, credit cards and other consumer financial products.

The bureau's broad powers and independent structure - it is funded through the Federal Reserve, not by Congress, and is run by a single director instead of a bipartisan board - made it the subject of debate from its early days.

President Barack Obama first announced Cordray as his choice to lead the bureau in 2011. Republicans in the U.S. Senate refused to confirm him until this summer.

Cordray said Republicans' eventual decision to confirm him showed the bureau's determination to remain nonpartisan and work with both consumer advocates and industry representatives. He said some of the pressure on the bureau seems to have eased.

"I got a strong sense in July when, after two years of not seeing a way, a path clear, there were a significant number of Republican senators who...voted for my confirmation," he said.

MORTGAGE RULES

Cordray said he was confident that most mortgage lenders would be able to comply with tough new rules for loan origination and servicing that were required by Dodd-Frank and that take effect in January 2014.

Under the new rules, lenders will have to verify that borrowers can repay their mortgages.

Some lenders, particularly smaller banks and other firms that rely on outside technology vendors, say they might struggle to update their systems and train staff in time.

"Everybody's had plenty of time to see this coming," Cordray said, adding that the bureau would take into consideration that some smaller firms would need more time to fully comply.

"What we're looking for come January 10 is that they've made good-faith efforts to come into substantial compliance with the rules," he said.

Cordray also said the bureau is keeping an eye on new financial products, which he said can evolve quickly. For example, he said regulators have seen a spike in use of reloadable prepaid credit cards and aggressive marketing of the products.

"There are other things that we all see coming, but nobody knows exactly how quickly and how dramatically they'll affect the market, like mobile payments and other things," he said. (Additional reporting by Paige Gance; Editing by Karey Van Hall and Bob Burgdorfer)