Special Alert: Treasury Issues Report Encouraging Sweeping Reforms to Regulation of Consumer Financial Products and Services
On June 12, the Treasury Department issued the first of four reports to the president detailing its review of financial regulation in the United States and making recommendations to reform federal regulatory oversight of depository institutions. For depository (and nondepository) institutions offering consumer financial products and services, the report sets forth a series of recommendations to reform the supervision and enforcement practices of federal financial regulators, and in particular the Consumer Financial Protection Bureau. The report also details a number of recommended reforms to regulations governing mortgage lending and servicing and indicates that the Treasury Secretary is particularly interested in modernizing the Community Reinvestment Act (CRA).
The report makes clear that the Treasury Department supports substantial structural reforms at the CFPB, many of which complement concepts included in the Financial CHOICE Act, which passed the House on June 8. The Treasury Department is particularly interested in reducing the autonomy of the CFPB by making the CFPB Director removable at will by the president or converting the CFPB to a commission, as well as by subjecting the CFPB’s budget to Congressional appropriations. The Treasury Department also proposes eliminating the CFPB’s supervisory authority, and would return that authority to the federal prudential regulators for depository institutions and to state regulators for other financial institutions, as applicable. The report also contains a number of recommendations to amend the CFPB’s enforcement authority, which are aimed at giving regulated institutions better advance notice of regulatory expectations and stronger procedural rights when responding to CFPB investigations. The proposed CFPB reforms come within a broader set of recommended reforms to the entire federal financial oversight structure designed to ensure consistency and fairness across regulators.
If you have questions about the ruling or other related issues, visit our Consumer Financial Protection Bureau practice page for more information, or contact a Buckley Sandler attorney with whom you have worked in the past.