Do you know your regulators? Do you know what they want, what they are expecting?
October Research, LLC asked Brian Johnson, partner at Alston & Bird, LLP; Tony Alexis, partner at Goodwin; and C. Hunter Wiggins, general counsel at the Illinois Department of Financial and Professional Regulation to shed some light on what might be happening should Rohit Chopra be confirmed as the new director of the Consumer Financial Protection Bureau (CFPB) and how to prepare for examinations. Tara Smith, group president at Stewart, which sponsored the program, moderated the discussion.
“First and foremost, the message coming out of the bureau is that there’s a new sheriff in town, or at least there’s a return of the old sheriff under new leadership,” Johnson said. “And so, the general expectation can be an emphasis both in rhetoric and to some extent the bureau’s actions to better emphasize supervision and enforcement of the laws under the CFPB’s jurisdiction.”
Johnson also spoke about acting Director Dave Uejio’s current priorities and how they could indicate what the bureau will be like under nominee Chopra.
“Rohit Chopra has already had what I would consider to be a dress rehearsal to be the director of the CFPB,” Alexis said. “Number one, he worked with the CFPB from the implementation (transition) team at the Department of Treasury until its designated transfer date. And when he was [at the CFPB] before, where he served as the person in charge of student lending, and then later became the student ombudsman. When Rohit left the CFPB, went to the Department of Education where he got, again, more involved into the student lending ecosystem, and that’s for-profit schools, not-for-profit schools, how you originate a loan, eligibility for a loan, how the loans are serviced, and how debt collection by the Department of Education is monitored, so it’s clear that he’s the expert in at least one particular market.”
Alexis suggested examining Chopra’s record as a commissioner for the Federal Trade Commission to get an idea of the nominee’s viewpoints and how he may approach the CFPB’s mission if confirmed, including reading his dissenting and concurring opinions.
Want more information about how the CFPB might be changing? Watch the webinar here.
Wiggins, Alexis and Johnson also gave tips on how to build relationships and get to know your regulators. All three said it depends on your business, and how likely you are to be examined.
“If you’re going to be a regular communicator with your state regulator, be a regular communicator outside of just your formal examination, or potentially enforcement, context,” Wiggins suggested. “There’s nothing wrong with reaching out, whether it’s through your direct examiner, or because in most states, the departments that are involved here are much more politically responsive than an independent federal agency, you can reach out much higher into these departments and introduce yourself.”
Questions also answered by the panel were:
- Do you foresee more states following Massachusetts and Illinois regarding the CRA (Community Reinvestment Act)? What about as it relates to the extensions beyond just the state extensions? Are we expecting those extensions to go beyond just credit and to other products, like insurance, for example?
- Do you see more cooperation with state authorities to revoke licenses as part of enforcement actions?