CFPB Acting Deputy Director Steve Antonakes discussed the agency’s supervisory and enforcement authorities, saying examinations of institutions are designed to “be rigorous and heavy on data analysis, with the important goal of also being fair and reasonable.”
“Our examination process will strive for transparency, efficiency and fairness,” Antonakes said in remarks prepared ahead of the Attorneys General Education Program at George Mason University School of Law. “It will not be about ‘gotcha’ or issues du jour. We communicate with institutions throughout the examination cycle. In most instances, institutions are advised of upcoming examinations well in advance of the start of our work. We also seek to keep the institution informed of the examination’s status and findings during the course of our review.”
Antonakes said the CFPB is different from traditional bank regulators in that the agency examines the potential risks to consumers as opposed to institutions, adding that the agency’s oversight “will become increasingly product-centric.”
Additionally, Antonakes said another responsibility of the CFPB is to “attempt to level the playing field” between banks and non-banks in terms of compliance with consumer protection laws.
“This dual authority provides the Bureau with the opportunity to oversee consumer financial products and services across charters and business models,” Antonakes said. “Consequently, charter or license type is becoming less relevant in determining how we will prioritize and schedule our examinations and investigations.”
The CFPB has begun the implementation of a framework that assigns agency resources across product types to create dynamic examination cycles. The agency will assess the potential consumers risk, as well as a number of other factors, including the size of the product, a regulated institution’s market share, the potential risk involved with the product and field and market data related to the institution.
“We are also very much committed to coordinating our examinations with other regulators to reduce the burdens on supervised entities for their time, space, and resources,” Antonakes said. “Some of that is prescribed by law, and some of it is good old-fashioned common sense. To this end, we have executed appropriate information-sharing agreements and communicate regularly with federal and state regulators about the scheduling of examinations and other supervisory activity. We will continue to coordinate closely with our fellow regulators above and beyond the minimum requirements.”
Antonakes said the CFPB “intentionally developed a coordinated approach” through its Office of Supervision, Enforcement, Fair Lending and Equal Opportunity.
“We are as efficient as possible,” Antonakes said. “We create consistency in our approach to interpreting legal standards among our offices. And, we reduce unnecessary burden on the entities we supervise by consolidating their interactions with the Bureau.”
Antonakes said the agency uses consumer complaints, whistleblower tips and data from government and consumer groups in its enforcement, which can be pursued through two different options: administrative proceedings or federal court action.
“We are often asked about what our enforcement priorities are and we’ve approached that question in what we think is a careful and thoughtful way,” Antonakes said. “Given the breadth and depth of the laws the Bureau enforces and the markets we touch, we must make smart, strategic decisions about how best to use our resources. The bottom line is that we are taking a proactive approach to making resource allocation decisions aimed at trying to remediate harm that has already occurred while also trying to prevent significant consumer harm from occurring.”