OIG Report: Fed Regulators Mostly Working Well Together, Cite Areas for Improvement (June 11, 2015)
A multi-agency federal regulator report concluded that the CFPB and prudential regulators are “generally” coordinating their oversight activities pertaining to consumer financial laws, consistent with the Dodd-Frank Act and the provisions of a MOU (memorandum of understanding) governing coordination activities. Although the report noted the need for enhanced coordination, it didn’t identify any instances of duplicative or conflicting supervisory guidance.
Released earlier this month, the report explored whether there are overlaps in regulatory oversight and responsibility among the prudential regulators and the CFPB. It included input from the CFPB and Offices of Inspector General (OIG) from the FDIC, Fed, OCC and NCUA (collectively the “prudential” regulators).
Under the Dodd-Frank Act, the CFPB has exclusive authority to examine financial institutions with assets more than $10 billion for compliance with consumer financial laws; while financial institutions with assets less than $10 billion fall under the authority of prudential regulators for examination and enforcement of federal consumer financial laws. The MOU dates back to 2012 and pertains to information sharing among the CFPB and prudential regulators about the $10 billion+ financial institutions—including sharing draft reports and examination schedules.
The agencies, however, noted the need for enhanced coordination. “Officials from the CFPB and prudential regulators reported that they were generally satisfied with the level of communication and coordination occurring, which has continued to improve since the inception of the CFPB. These officials also identified challenges to coordinating certain supervisory activities and stated that they continue to discuss opportunities for improved coordination.”
Areas identified for improved coordination between the CFPB and prudential regulators include:
- Conducting simultaneous examinations
- Communicating about draft supervisory letters
- Establishing a framework to address the potential for conflicting supervisory determinations
- Developing a standard CFPB process for notifying the prudential regulators of federal consumer financial law violations by other institutions
Click here to read the full report.