The Consumer Financial Protection Bureau has agreed to pull its enforcement attorneys out of exams with financial companies after relentless opposition from bankers to their presence.
The agency confirmed the change late Wednesday, saying it would no longer physically send enforcement personnel as part of a regular exam. The banking industry has long been concerned with the process, saying the presence of enforcement attorneys was seen as a threat and hampered open communication with examiners.
But Jennifer Howard, a spokesperson at the CFPB, said it simply "wasn't efficient" to have enforcement attorneys physically present along with examiners during the exams.
"Supervision examiners and enforcement attorneys will continue to work closely to ensure that the financial institutions that we oversee are following the rules," said Howard in an email. "Instead, we have decided that enforcement attorneys will continue to coordinate with examiners offsite. We think this approach will result in better overall oversight."
The news should be a relief for the financial industry that spent nearly two years complaining that the presence of enforcement attorneys made the exam process more hostile.
"The bureau expected the industry to get comfortable with the policy over time, and it just never happened," said Ronald L. Rubin, a former CFPB enforcement attorney who is now a partner in the Hunton & Williams' Washington office. "The policy was always an experiment, with one of the goals being to foster a closer relationship between the examiners and the enforcement attorneys. The bureau learned that the nature and logistics of the two jobs are very different, and there is a limit to how much of that gap can be bridged. Ultimately, the costs of the policy outweighed the benefits, and they were wise to throw in the towel."
