The Consumer Financial Protection Bureau (“CFPB”) and the Conference of State Bank Supervisors recently published a road map for coordination of enforcement powers between the CFPB and state regulators (the “Framework”) over entities that offer consumer financial products and services subject to concurrent jurisdiction under sections 5514 and 5515 of the Dodd-Frank Act. The document follows a 2011 Memorandum of Understanding between the CFPB and state banking authorities, and establishes a methodology for resource and information sharing with regard to: (i) establishment of responsibilities of various regulators, (ii) concurrent CFPB and state examination of state-chartered financial institutions, and (iii) coordination of enforcement actions.
The Framework assigns supervisory responsibility over large state-chartered depository institutions (entities with more than $10bn in assets, or “Covered Depository Institutions”) to banking regulators in the Covered Depository Institution’s home state (“Home State Supervisors”), and establishes a State Coordinating Committee (“SCC”) comprised of members from participating states to supervise non-depository entities within the CFPB’s jurisdiction (“Covered Non-Depository Entities”). Home State Supervisors and the SCC are to use the Framework to establish and coordinate examination procedures for the types of entities they supervise, and are to assign a Single Point of Contact (“SPOC”) tasked with developing a written Supervisory Plan for each entity. Additionally, the Framework proposes the development of common protocols, procedures and forms to facilitate cooperation and information sharing under the Framework.
Acknowledging the fact that the majority of the CFPB’s enforcement actions to date have resulted from collaboration with, and referrals from other regulatory authorities, the Framework is intended to formalize the two-way flow of information between the CFPB and state banking regulators. However, the Framework is limited by the fact that numerous laws applicable to payday lending, debt collection and credit reporting typically fall outside the jurisdiction of state banking authorities, and are typically enforced by state attorneys general, nor does the Framework address coordination of concurrent enforcement actions against Covered Non-Depository Entities that violate both state and federal laws. The CFPB and the National Association of Attorneys General addressed collaboration in an April 2011 Joint Statement of Principles, but political divisions regarding the scope of the CFPB’s mandate have hampered further formal cooperation.
These developments highlight the increasing importance of state consumer financial services laws. The Davis Wright Tremaine Payments Group maintains a knowledgebase, available on a subscription basis, that contains comprehensive analysis of these laws, including state laws governing credit cards and debit cards, debt collection, unfair and deceptive acts and practices, and financial privacy. For more information or to subscribe, please contact us.
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