CFPB makes structural changes after expanding authority over nonbanks

Bloomberg News

Consumer Financial Protection Bureau Director Rohit Chopra announced that its supervision and enforcement offices will operate as separate, stand-alone divisions within the bureau.

Chopra told the CFPB's staff in February that he had dissolved the Office of Supervision, Enforcement and Fair Lending and also had eliminated the associate director job that had been held by former acting CFPB Director Dave Uejio. The move was made public Tuesday as part of a procedural rule change in which the CFPB updated how the agency designates nonbanks for supervision. 

The upshot of the changes is that Enforcement Director Eric Halperin and Supervision Director Lorelei Salas now report directly to Chopra without the layer of another senior official in-between. 

"We will be transitioning the administrative structure of [the Office of Supervision, Enforcement and Fair Lending] into two separate operating units," Chopra wrote in an email to staff. He announced in February that Uejio had accepted a job at the Federal Housing Finance Agency and that his position as associate director would be eliminated. 

"A flatter organization structure will allow us to be more agile in our response to emerging risks and will facilitate faster decision-making," Chopra wrote in the email. "In the early days of the CFPB, there was concern that Supervision and Enforcement needed to be in a single division in order to foster robust collaboration and coordination on deploying our tools."

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As part of the changes, a half-dozen employees were reassigned to other positions.   

David Bleicken, the CFPB's deputy associate director of the now-defunct Office of Supervision, Enforcement and Fair Lending, remains in a senior role at the bureau. Previously, the CFPB's fair lending office was stripped of its enforcement powers in 2018 under former CFPB Director Mick Mulvaney, and that unit, the Office of Fair Lending and Equal Opportunity, has been under the CFPB director's purview ever since. 

The CFPB has not updated its organization chart since January. Salas is still listed as acting assistant director of the Office of Supervision Examinations and assistant director of the Office of Supervision Policy. She is now director of supervision, a spokesman said.

The organization changes could have an outsize impact on nonbanks that are designated as risky and, therefore, subject to supervision. 

Because of the elimination of the associate director job, the CFPB made changes to reflect that the new supervision director is now the "initiating official" in supervisory designation proceedings, as well as in so-called contested proceedings. The update was necessary to transfer the former associate director's supervision-related functions to the supervision director.

Some experts who follow the CFPB closely said the net effect of the move is that Chopra eliminated a career civil service job, concentrating more authority in the director's office. 

Further, though CFPB supervisory exams are confidential, the CFPB in February publicly released the first decision in a contested proceeding against World Acceptance Corp., a large installment lender that the bureau said poses a risk to consumers. It marked the first time that the CFPB publicly disclosed its findings to supervise a nonbank after a contested administrative proceeding. 

The determination of supervising a nonbank now can be made by the director of supervision in a recommendation to the CFPB director without an additional senior official weighing in.  

The bureau initiated its first round of supervisory designation proceedings last year after announcing in 2022 that it would actively use a dormant authority to supervise nonbanks that are not currently subject to supervisory exams. The CFPB said that entities can either consent to supervision or contest a notice.