Keith Noreika, the Acting Comptroller of the Currency, has sent a letter dated July 17 to Director Cordray asking him to delay publication of the CFPB’s final arbitration rule in the Federal Register. The July 17 letter responds to Director Cordray’s July 12 letter to Mr. Noreika. In his July 12 letter, Director Cordray responded to Mr. Noreika’s July 10 letter in which he stated that OCC staff had expressed safety and soundness concerns arising from the proposed arbitration rule’s potential impact on U.S. financial institutions and their customers.
In addition to raising safety and soundness concerns, Mr. Noreika’s July 10 letter asked Director Cordray to provide the data used by the CFPB to develop and support its proposed arbitration rule. In his July 17 letter, Mr. Noreika repeats his data request, commenting that “despite your prior telephonic and in-person assurances that we would have access to the CFPB’s data, your July 12 letter ignores my request.” While stating that he “appreciate[s]” Director Cordray’s assurances in his July 12 letter that the final arbitration rule does not have any safety and soundness impact on the federal banking system, Mr. Noreika also observes that “the CFPB, by design, is not a safety and soundness prudential regulator.”
Mr. Noreika explains that he asked the OCC’s Economics Department to analyze the proposed rule for its impact on the federal banking system when he became aware of the proposal several weeks after becoming Acting Comptroller and, so that the OCC could complete its review, was asked by the OCC’s chief economist on July 5 to request the CFPB data. Mr. Noreika adds that he “had hoped to discuss this request with [Director Cordray] prior to the release of the Final Rule, but the timing of the release of the Final Rule was not shared with me in advance.” While expressing appreciation for Director Cordray’s offer in his July 12 letter to have the CFPB staff review its arbitration study and rulemaking analysis with OCC staff, Mr. Noreika states that such review would “be helpful, but not sufficient, to allay my concerns.”
Mr. Noreika, in his July 17 letter, not only repeats his request for the CFPB data, but also asks Director Cordray to delay publication of the final arbitration rule in the Federal Register “until my staff has had a full and fair opportunity to analyze the CFPB data so that I am able to fulfill my safety and soundness obligations.” Mr. Noreika’s request for the publication delay is undoubtedly tied to the timing in the Dodd-Frank Act for an agency that is a member of the Financial Stability Oversight Council (FSOC) to file a petition with the FSOC to set aside a CFPB final regulation. A member agency can file such a petition with the FSOC if the member agency “has in good faith attempted to work with the Bureau to resolve [safety and soundness or financial system stability] concerns” and files the petition no later than 10 days after the regulation has been published in the Federal Register. If a petition is filed, any member agency can ask the FSOC Chairperson (i.e. Treasury Secretary Mnuchin) to stay the effectiveness of a regulation for up to 90 days from the filing.