-
The Consumer Financial Protection Bureau is spending too much on top officials' salaries, travel and a planned office renovation, Republicans said during a House Financial Services subcommittee hearing on Tuesday.
June 18 -
Regulators are looking more closely at the way banks choose and manage their vendors. One insider tip: clue the regulators in to new projects ahead of time.
June 19 -
The constant pillorying of banks can hardly inspire public confidence in them. Regulators should focus, instead, on peer comparisons and the encouragement of effective policies and procedures.
June 10 -
State and federal authorities are taking a hard look at how banks collect consumer debts. A multi-billion dollar market may be remade through tighter rules or enforcement actions.
January 16
The Consumer Financial Protection Bureau on Tuesday advised banks and other financial companies how to respond to an investigation to minimize the risk of punishment.
The CFPB has hit banks and nonbanks with a slew of enforcement actions in the last year. To prevent some inquiries from escalating into something more severe, the
"The purpose of the bulletin is to encourage providers of consumer financial products and services to do certain things that have real consumer benefits and contribute to our work in protecting consumers," the CFPB's assistant director of enforcement, Kent Markus, wrote in a blog posting used to release the bulletin.
"If providers of financial products and services show significant responsible conduct in our enforcement investigations, we will take that into account when deciding which cases to pursue and how to resolve the ones we do pursue," he wrote.
The bureau gave four principal pointers: self-police for potential violations; proactively report any potential violations; remediate any harm quickly; and promptly cooperate with the bureau "above and beyond" what is required. It also provided a checklist for each of the four pointers.
"If a party meaningfully engages in these activities ... it may favorably affect the ultimate resolution of a bureau enforcement investigation," the bulletin said.
Though practically any bank regulator would encourage a company to do the same, it's often easier said than done. Since enforcement actions rose following the financial crisis, some banking lawyers and industry officials are cautious in how freely they volunteer information to the regulators for fear that it would unintentionally be misconstrued into a potential violation. At the same time, not many banks have denied requests or fought the regulators once they make a formal allegation. That is partly why most enforcement actions will say the bank consented to the order without confirming or denying the allegations.
"Increasingly, these enforcement actions reflect differing judgments between supervisors and supervised institutions about how to address technical violations of incredibly complex regulations or the appropriateness of practices that comply with regulatory requirements and are embraced by consumers," Oliver Ireland, the co-head of the financial services practice at Morrison & Foerster,
"Some will applaud the increase in enforcement actions as evidence of more vigorous enforcement, or even call for more stringent penalties, but it should be viewed as a breakdown in the supervisory process."
The CFPB is still building out its supervision and enforcement team, but it has aggressively sought out violations and imposed penalties. Last week, the CFPB reported to lawmakers that its enforcement actions had resulted in $425 million refunded to about 6 million consumers.
Though the CFPB said in its bulletin that it would look favorably on companies that follow its advice, it cautioned that did not mean it would back down.
"In the bureau's consideration of a party's conduct in these areas it must be stressed that what best protects consumers is ultimately central to the bureau's exercise of its enforcement discretion," the bulletin said. "Self-policing, self-reporting, remediation and cooperation with the bureau's investigation are unquestionably important in promoting the best interests of consumers, but so too are vigorous, consistent enforcement of the law and the imposition of appropriate sanctions where the law has been violated."
