|October 18, 2013|
Previously published on October 14, 2013
On October 10th, the CFPB announced that it will discontinue its controversial practice of sending its enforcement attorneys to participate alongside supervision examiners in its examinations of supervised entities. This practice had been a major point of contention between the CFPB and the financial industry. The industry repeatedly protested that the attendance of enforcement attorneys at examinations threatened the sanctity of the supervisory process by transforming it into an adversarial proceeding.Meanwhile, the Bureau repeatedly sought to assure the industry that its practice was nothing more than a benign effort to educate enforcement attorneys about compliance trends.
CFPB spokeswoman Jen Howard asserted that Bureau’s sole motivation for discontinuing its policy was to conserve enforcement resources for other purposes. Nevertheless, it seems clear that the Bureau acted - at least in part - to mollify its critics. Although the industry has reason to cheer this development, its importance should not be overstated. The Bureau has made clear and supervised entities should expect that examiners will continue to coordinate closely with their enforcement counterparts, but they will do so off-site.
The Bureau’s new policy will go into effect on November 1, 2013, affecting both the bank and nonbank supervision programs.