A group of federal agencies including the Consumer Financial Protection Bureau (CFPB) released a memorandum of understanding (MOU) on June 4 that explains how the agencies will coordinate their supervisory activities as required under the Dodd-Frank Act.
Section 1025 of the Dodd-Frank Act requires that the CFPB, the Board of Governors of the Federal Reserve System, 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 more than $10 billion in assets and their affiliates.
According to the MOU, it has seven objectives:
- Address the requirements of section 1025(e) of the Dodd-Frank Act, including establishing which examination schedules must be coordinated, which examinations must be conducted simultaneously, what it means to conduct an examination simultaneously, and how insured depository institutions may request to opt out of simultaneous examinations;
- Establish voluntary arrangements for coordination and cooperation between the CFPB and the prudential regulators, consistent with the respective authorities and business needs of each, with respect to the areas described in sections III.C. and D;
- Minimize unnecessary regulatory burden on covered institutions;
- Avoid unnecessary duplication of effort;
- Ensure that the CFPB and the prudential regulators effectively and efficiently carry out their respective responsibilities;
- Decrease the risk of conflicting supervisory directives by the CFPB and prudential regulators; and
- Increase the potential for synergies and alignment of related supervisory activities of the CFPB and the prudential regulators.
The MOU specifies how the agencies will conduct simultaneous or coordinated examinations and how they will share information. For instance, the MOU states that the prudential regulators and the CFPB will generally carry out certain bank examinations in a simultaneous manner. However, the agencies are not required to conduct examinations jointly. Depository institutions may request that examinations by the prudential regulators and the CFPB be conducted separately. The CFPB and the other agencies will also share draft examination reports for comment.
The document also states that the agencies agree to review the MOU at its first anniversary to consider revisions necessary to accomplish the agencies’ objectives.