The Consumer Financial Protection Bureau has taken a very different approach to supervision and enforcement than banking regulators and it has put compliance officers on high alert.
Bankers are not used to regulators that publicize consumer complaints, send enforcement attorneys on
“That instills a little bit of fear in regulated entities,” Stein told a CFPB forum sponsored by the Venable and Dechert law firms.
“Some of the actions the bureau has taken have been very carefully crafted to prompt firms to change their conduct before they are ever subject to an exam or an enforcement action,” he said. Stein worked at the CFPB in the Office of Regulations.
Arnold & Porter partner Michael Mierzewski noted that the presence of enforcement attorneys during examinations “really creates a chilling effect.” Clients claim it is a far less productive way to conduct an exam. “It makes everyone defensive,” the attorney said.
Meanwhile, the CFPB is getting some push-back from Senate Republicans and some bankers over its extensive data collection activities.
However, the bureau needs to know more about the industry than the companies and their trade groups are willing to disclose, according to Stein.
The data will allow the bureau to spot emerging trends and identify firms that are engaging in activities that may pose significant risks to consumers.
“It makes perfect sense to me,” Stein said, provided this data is properly protected. But it is “scaring a lot of people,” he added.
