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CBA Writes Senate Banking Committee on Guidance, Supervision, Regulatory Coordination
CBA Writes Senate Banking Committee on Guidance,
Supervision, Regulatory Coordination
Letter restates support for GUIDE Act, CFPB Supervision of Nonbanks
WASHINGTON – Consumer Bankers Association President and CEO Richard Hunt wrote Senate Banking Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) to discuss the use of proper regulatory guidance, the need for experienced bank examiners and the importance of regulatory coordination among supervisory agencies.
The letter also restates CBA’s support for the bipartisan GUIDE Act and calls for legislation similar to the Financial Institution’s Examination Fairness and Reform Act, introduced as H.R. 4545 in the 115th Congress. Finally, CBA’s letter urges the Consumer Financial Protection Bureau to “promote a level regulatory playing field through the robust supervision of nonbanks, who are playing an increasingly large role in mortgage originations and consumer deposit taking, among other areas.”
A full copy of the letter is available here.
Role of Guidance:
On the role of guidance, Hunt wrote, “CBA supports a regulatory framework that provides clear rules of the road which have been vetted through formal notice and comment periods. The rulemaking process, as mandated by the Administrative Procedure Act and the Dodd-Frank Act, is time consuming for a reason: it demands agencies adhere to a strict process that invites those who are affected by a proposal to have a say in the creation of the rule. While we are strong proponents of formal rulemaking, we also recognize there is an appropriate role for regulatory guidance to provide financial institutions with needed clarity.”
CBA’s letter noted under the leadership of former CFPB Director Richard Cordray, the use of guidance sometimes pushed the boundaries and overstepped the Bureau’s mandated authority.
“To ensure proper rulemaking and instructive guidance is issued for future CFPB actions, CBA supports previously introduced bipartisan legislation known as the GUIDE Act, which would provide greater clarity to what constitutes guidance, improve compliance with consumer financial protection laws, and bring predictability,” Hunt wrote.
Supervision & Qualified Examiners:
On supervision, CBA noted, “Bank examinations are an essential function of the regulatory process that oversees financial institutions and ensures compliance with regulations and adherence to safety and soundness standards. It is critical prudential bank examiners and CFPB examiners be experienced, competent and conduct their jobs without pre-judgement. Unfortunately, it has been the experience of some CBA members that CFPB examiners have had little to no experience making examinations disjointed, overly burdensome, and time consuming. CBA also strongly encourages the CFPB to promote a level regulatory playing field through the robust supervision of nonbanks, who are playing an increasingly large role in mortgage originations and consumer deposit taking, among other areas”
In the 115th Congress, CBA supported H.R. 4545, the Financial Institution’s Examination Fairness and Reform Act. This bill would provide additional clarity to the examination process and allow banks and credit unions the right to have supervisory determinations reviewed by the newly created Independent Examination Review Director that would be housed under the Federal Financial Examinations Institution Council (FFIEC). The bill would also require reasonable time limits for examiners to provide their findings to the institutions they oversee. CBA encourages Congress to support this legislation to increase impartiality and help streamline the examination process for banks and credit unions.
Increased Regulatory Coordination:
Many CBA Members are supervised by multiple federal and state regulatory agencies. “A single financial services company can be examined by the Federal Reserve, the OCC, the FDIC, and the CFPB. In some cases, more than one agency is examining a bank for similar or related issues, each with a slightly different set of lenses. The same documents can be requested, or variations can be sought, and similar inquiries can be made to the same people. Better coordination is needed to minimize the cost and burden to the financial institutions, permitting them to better serve their customers,” Hunt wrote.
CBA added enforcement actions can be a multi-agency process in a desire to demonstrate regulatory authority. This duplication reduces the effectiveness of the enforcement process. The Treasury Department, in its 2017 report on financial services, recommended a single entity act as a coordinator of these regulatory actions. CBA encourages Congress to take a closer look at the benefits increased coordination could bring to the regulatory process.
About the Consumer Bankers Association:
The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on Twitter @consumerbankers.