Bankers Grill CFPB's Antonakes on Exam Process

PHOENIX — Bankers got a chance Tuesday to air some of their grievances with the Consumer Financial Protection Bureau, as the agency's second-in-command took questions at an industry conference.

A question-and-answer session with Steve Antonakes, the agency's acting deputy director, was notable in part for what didn't come up. There were not a lot of complaints about the rules the agency has written so far, including a broad overhaul of the mortgage industry that was unveiled in January.

Instead, the questioning focused largely on aspects of the CFPB's examination process, including the amount of time it takes for the bureau to finish an exam. Antonakes asked that bankers be patient.

"We are a startup organization in many respects," Antonakes told the audience at the Consumer Bankers Association's annual conference. "I would just encourage you to not always think the worst."

Bankers are listening carefully to what Antonakes has to say. Not only is he the top deputy to Director Richard Cordray, he would be in line to run the agency next year if the long-running impasse in Congress over Cordray's nomination continues.

During a 20-minute Q-and-A session, bankers voiced concern about the amount of time it is taking the bureau to close out its examinations.

Antonakes responded by noting that the agency has only hired about two-thirds of its exam team. Also, the varied backgrounds of its examiners and the agency's efforts to ensure that similar fact patterns are treated consistently in different parts of the country can slow the process, he said. The goal is to reduce the turnaround time to 60 to 75 days, he said.

"To the extent that folks have experienced delays in either closing out the exam or issuing a product, that situation is not what we aspire to," Antonakes said. "I also want to kind of put people at ease that if an exam report is outstanding, it doesn't mean that enforcement or some type of rigid corrective action is being considered."

The lack of experience among examiners is also a common complaint among bankers.

Antonakes acknowledged that many of the CFPB's examiners have less than five years of experience. But other federal banking regulators have a similar type of workforce, he said — with some very experienced examiners and some relatively inexperienced ones, and not a lot of employees in between.

Among the other issues touched on during the Q-and-A:

• The role of enforcement lawyers. Another long-standing gripe inside the industry is the CFPB's policy of bringing enforcement lawyers along on its examinations, which bankers say makes exams needlessly adversarial.

Antonakes said that the practice has perhaps been applied unevenly in some cases, but he gave no indication that the agency will reconsider its decision to bring along enforcement lawyers. "It was never intended to give a sense that we were trying to show our teeth," he said.

• Data requests. Some banks have complained about the large volume of data requests from the CFPB.

Antonakes made no apology for the data-collection efforts, though he suggested that the bureau is open to working with banks to make those requests less burdensome.

"To the extent there's a sense that data requests are overly burdensome," he said, "I would encourage you to engage your examiner in charge in some kind of discussion."

• The burden on large banks. Richard Hunt, president of the Consumer Bankers Association, which represents large banks, asked a couple of questions suggesting that members of his trade group are unfairly bearing the brunt of the CFPB's oversight.

One of the questions involved the exemption the consumer agency granted to new rules on remittance payments; that exemption will largely benefit smaller institutions. The other involved Wal-Mart's ongoing expansion into financial products.

Antonakes did not take the bait on either question, though he did note that the CFPB has the authority to write rules regarding large participants in markets that Wal-Mart is entering.

• Clarity about the agency's intentions. In a survey Tuesday, conference goers were asked what their biggest concern is regarding the CFPB over the next year.

The options were 1) leadership; 2) enforcement; 3) examinations; 4) structure and leadership; and 5) lack of clarity. The fifth option won easily, garnering 54% of the vote.

Antonakes was asked to respond to the survey results, and he said: "I guess the way the question was phrased, it didn't surprise me totally."

"We do not want to operate in a cloak of darkness," he added. "We want to be fairly transparent. We want folks to understand how we operate."