The Consumer Financial Protection Bureau has made two significant decisions for examinations: to hire a large portion of examiners from outside of the other federal financial regulatory agencies and to bring lawyers along at the beginning.
Those decisions are based on an effort to avoid the dread phenomenon of “regulatory capture,” in which regulators become too close to the banks they regulate, explains Rob Blackwell in American Banker’s first piece in a two-part series about the bureau’s first year.
"We weren't trying to replicate another agency's culture — we wanted to create our own," said Steve Antonakes, the CFPB's enforcement chief.
Some bankers have complained about examiners being too green. "I know some banks that have had very good experiences and some that have been concerned and frustrated," said Jo Ann Barefoot, co-chair of Treliant Risk Advisors.
As for the decision to have lawyers present at exams, "we want supervision examiners to understand the role of enforcement. But we also — and this is important and the banks miss this — we want the enforcement attorneys to understand the role of examination and supervision," said Cordray. And Antonakes explained the lawyers are usually just present at the beginning.
Nevertheless, the practice has drawn a strong reaction. "None of the other federal banking agencies have ever done it," said Alan Kaplinsky, a partner at Ballard Spahr. "I don't think it's a good thing. It puts a chilling effect on the exam process."
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