New consumer agency targets debt collectors. Who can argue with that?

The nation's new cop on the beat for financial services is taking its most significant step yet: moving to bring many debt collectors and the credit-rating industry under federal supervision for the first time.

The Consumer Financial Protection Bureau (CFPB) announced its plan Thursday, citing its authority under the so-called Dodd-Frank Act, which created the agency in the wake of the financial crisis of 2008.

Republicans in Congress have opposed the very concept of the agency as a symbol of unneeded new regulation, and its creation – as well as the appointment of its first director – have served as focal points for the GOP leadership’s criticism of President Obama and his policies.

The move Thursday, therefore, represents a chance for the CFPB, under director Richard Cordray, to define its image as a responsible guardian of consumers in the arena of banking and borrowing.

Its message seems to be: We're on the case, but we're not the overzealous bureaucrats that you've been told to fear.

Mr. Cordray is choosing his first action to target an area of finance where consumers have many complaints.

The proposed supervision will cover debt-collection firms that have at least $10 million in annual revenues, or about 175 firms accounting for 63 percent of the industry. It would also mean new supervision of credit reporting firms such as Experian, Equifax, and TransUnion.

Of course, "not overzealous" is in the eye of the beholder. Cordray pledged that this was the first in a series of new consumer protection efforts, and critics argue that the agency could end up dampening innovation and activity in a vital industry that's already under strain, due to recession-related defaults by borrowers.

Cordray was recently installed in his position through a controversial appointment made by Mr. Obama during a congressional recess, which bypassed the Senate confirmation process.

For Obama, the agency and its new move fit with his populist theme of leveling America's economic playing field, so that bankers and financial firms play "by the same rules" as people on Main Street.

Cordray laid out the rationale for the new oversight in a statement Thursday.

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