The Offices of Inspector General for the Fed/CFPB, FDIC, Treasury and NCUA have issued a report setting forth the results of their review of the extent to which the CFPB and prudential regulators (FDIC, Fed, OCC and NCUA) were coordinating their supervisory activities and avoiding duplication of regulatory oversight responsibilities.
To assess the agencies’ efforts, the steps taken by the OIGs included reviewing relevant provisions of the Dodd-Frank Act, interviewing CFPB and prudential regulator officials, reviewing MOUs developed by the CFPB and prudential regulators, and conducting research to determine if there were complaints from regulators or financial institutions regarding regulatory overlap. Dodd-Frank gave the CFPB exclusive authority to examine institutions with assets over $10 billion and their affiliates for compliance with federal consumer financial laws. The OIGs reviewed the agencies’ key coordination efforts for large institutions, including sharing examination schedules and conducting simultaneous examinations, sharing draft examination reports, sharing supervisory letters, addressing conflicting supervisory determinations, and initiation of enforcement proceedings.
For institutions with assets of $10 billion or less, Dodd-Frank left the authority to examine such institutions for compliance with federal consumer financial laws with the prudential regulators but allowed the CFPB to include its examiners on a sampling basis in examinations. The report discusses the CFPB’s activities pertaining to smaller institutions with regard to participating in examinations, sharing reports and enforcement proceedings. The report indicates that the CFPB has not asked to include any of its examiners on a sampling basis and has requested a limited number of examination reports pertaining to smaller institutions.
The OIGs found that the CFPB and prudential regulators were generally coordinating their regulatory oversight activities for federal consumer financial laws, consistent with Dodd-Frank and the May 2012 MOU among the CFPB and prudential regulators on coordination of activities with respect to larger institutions. The OIGs also found that opportunities exist for enhanced coordination. Such opportunities include: (1) conducting more simultaneous examinations, (2) improving communication among regulators of matters identified in draft supervisory letters, (3) creating a framework for the handing of conflicting supervisory determinations, (4) developing a CFPB policy for providing notifications or recommendations to the prudential regulators when the CFPB believes a smaller institution has violated a federal consumer financial law, and (5) giving more timely notice to prudential regulators of CFPB information requests.