Days after he suggested smaller depositories should be subjected to different consumer-compliance rules than larger ones, Consumer Financial Protection Bureau Director Richard Cordray said regulators simply should consider the differences between financial institutions when crafting rules for everyone.
"What I have said is there are different institutions at different levels of sophistication and that's something that we should very much take into account as we go about writing regulations for the broader market," Cordray said in remarks to the Consumer Bankers Association convention in Austin. "As to where we draw those lines, it's going to vary from market to market, (and) it's going to vary from product to product."
Cordray made the statement in response to a question from Richard Hunt, the CBA's president and chief executive. The CFPB chief's appearance followed a speech last week to the Independent Community Bankers of America, where he essentially said subjecting small banks to the exact same regime faced by larger institutions was not feasible.
While reminding the CBA audience that CFPB regulations apply to all depository institutions, regardless of size, he said there could be certain circumstances where an addendum to a rule provides more flexibility for smaller banks.
Under the Dodd-Frank Act, the bureau is responsible for supervising banks with more than $10 billion in assets, and for enforcing consumer financial laws for those banks. Smaller banks will continue to be supervised by their prudential regulators.
In an interview Cordray said the broader aim of the agency is to level the playing field between banks and nonbanks, which before Dodd-Frank were never subject to a formal consumer regime. But that does not negate recognizing certain instances where there are distinctions between institutions based on size, he added.
"There was something and there was nothing - that doesn't work," he said of the difference between banks and nonbanks. "But in a thoughtful, careful way, potentially writing rules that might apply differently at different levels of institutions with different business models, that makes sense."
"The notion that rules applicable in one consumer market are necessarily exactly the same as would apply in other consumer markets, it's much more situational than that," he added. "I think that's true here."
