Agencies Agree on Supervisory Coordination

Agencies Agree on Supervisory Coordination

bank reformOn June 4, five federal financial regulatory agencies released a memorandum of understanding clarifying how they will coordinate supervisory activities, consistent with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

A goal of streamlining
The memorandum is intended to codify coordination and cooperation between the Consumer Financial Protection Bureau (CFPB) and the prudential regulators in order to minimize unnecessary regulatory burden, avoid duplication of effort, and decrease the risk of conflicting supervisory directives.

Section 1025 of the Dodd-Frank Act requires that the CFPB and the prudential regulators—the Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency—coordinate important aspects of their supervision of insured depository institutions with $10 billion or more in assets and their affiliates. Coordination includes scheduling examinations, conducting simultaneous examinations of institutions unless an institution requests a separate examination, and sharing draft reports of examination for comment.

Four broad areas of coordination
Under the memorandum, the agencies will coordinate activities and share certain supervisory information concerning:

  • compliance with federal consumer financial laws and certain other federal laws that regulate consumer financial products and services
  • consumer compliance risk management programs
  • underwriting, sales, marketing, servicing, and collections related to consumer financial products or services and
  • other related matters that the agencies may mutually agree upon

June 18, 2012