A September 29, 2014 Report of the Joint Federal Reserve/CFPB Office of the Inspector General (OIG) concluded that the CFPB’s rulemaking process generally complies with the requirements of Section 1100G of the Dodd-Frank legislation and offered only minor criticisms identifying potential improvements. Section 1100G amended the Regulatory Flexibility Act to require the Bureau to (A) assess the impact of any proposed rule on the cost of credit for small business entities through regulatory flexibility analyses and (B) to convene panels to seek direct input from small business entities prior to issuing certain rules.
The CFPB’s Division of Research, Markets, and Regulations (RMR) created two internal guidance documents that outline the agency’s process to comply with these requirements. OIG reviewed both documents, along with some randomly selected rulemaking proceedings, to assess overall compliance with Section 1100G.
The report makes three recommendations predicated principally on the following findings:
- RMR’s interim policies and procedures have been in use for approximately two years without being updated or finalized
- Those interim policies and procedures afforded teams significant discretion in their 1100G rulemaking approach to regulatory analysis, which contributed to a variance in documentation and inconsistent knowledge transfer practices
- RMR takes an inconsistent approach with respect to storing supporting documentation related to 1100G rulemakings.
The three recommendations offered by the report are for the Bureau to:
- Finalize RMR’s interim policies and procedures;
- Establish a standard approach to manage electronic documents that facilitates retrieval of Section 1100G rulemaking supporting documentation; and
- Ensure that the standard approach complies with CFPB’s Policy for Records Management, in addition to other applicable provisions, such as the Federal Records Act, including National Archives and Records Administration regulations.