Five federal supervisory agencies, including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, the National Credit Union Administration (Prudential Regulators), and the Consumer Financial Protection Bureau (CFPB or Bureau) on June 4 released a Memorandum of Understanding (MOU) dated May 16 that clarifies how the agencies will coordinate their supervisory activities pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). Section 1025(e)(1) requires that the CFPB and the Prudential Regulators: (1) coordinate the scheduling of examinations of Covered Institutions (generally, institutions with $10 billion or more in assets, and affiliates of such institutions) (2) conduct simultaneous examinations of insured depository institutions with more than $10 billion in assets and their insured depository institution affiliates unless the institution requests separate examinations; (3) share draft reports of examinations of Covered Institutions with the other regulatory agency and permit such at least 30 days to comment on the draft report before it is made final; and (4) take into consideration any concerns raised by the other regulatory agency before issuing the final report of examination.
The total assets of an insured depository institution are measured in accordance with the Supervisory Statement: Determination of Depository Institution and Credit Union Asset Size for Purposes of Sections 1025 and 1026 of the Dodd-Frank Act, issued by the Prudential Regulators and the CFPB (the Agencies) on November 17, 2011.
The Agencies will notify each other, as applicable, before engaging in a supervisory action or examination with respect to a subsidiary of an institution the accounts of which are insured by the FDIC (Nondepository Subsidiary). If the CFPB notifies the Prudential Regulator that it will examine or take supervisory or enforcement action relating to Federal consumer financial laws against any Nondepository Subsidiary, the Prudential Regulator will defer to the CFPB on matters relating to supervision or enforcement of the Federal consumer financial laws. The CFPB and the Federal Reserve Board plan to separately memorialize their arrangements to coordinate supervisory activities related to holding companies and their subsidiaries.
The MOU requires the Agencies to establish arrangements for coordination and cooperation between the CFPB and the Prudential Regulators, minimize unnecessary regulatory burden, avoid unnecessary duplication of effort, and decrease the risk of conflicting supervisory directives. This MOU, however, "is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the CFPB or the Prudential Regulators, nor does it limit or modify in any way the CFPB’s or any Prudential Regulator’s authority to engage in, or bring, supervisory, enforcement, or other actions, under applicable laws or to interpret those laws."
Under the MOU, the Agencies will coordinate examinations and other supervisory activities and share certain material supervisory information concerning:
Compliance with federal consumer financial laws and certain other federal laws that regulate consumer financial products and services;
Consumer compliance risk management programs;
Activities such as underwriting, sales, marketing, servicing, collections, if they are related to consumer financial products or services; and
Other related matters that the agencies may mutually agree upon.
According to the Agencies, "[t]hese coordination undertakings should lead to greater uniformity and efficiencies in supervision and help to minimize regulatory burden on covered depository institutions." The CFPB has previously entered into memoranda of understanding with the Conference of State Bank Supervisors and the Federal Trade Commission.