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Board Report: OIG-CA-11-004 January 10, 2011

Joint Response by the Inspectors General of the Department of the Treasury and the Board of Governors of the Federal Reserve System to a Request for Information Concerning the Bureau of Consumer Financial Protection

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On January 10, 2011, the Board and the Treasury OIGs jointly issued a letter that responded to a November 22, 2010, congressional request for information related to the Bureau's transparency, organizational structure, and regulatory agenda. In order to respond, we (1) reviewed the applicable sections of the Dodd-Frank Act and other relevant laws and (2) requested, obtained, and reviewed relevant information and documentation from the Board and the Treasury. In addition, we interviewed key Treasury officials, including the Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau, the General Counsel, the Chief of Staff of the Bureau Implementation Team, the Deputy Assistant Secretary for Management and Budget, and the Director of the Office of Financial Management.

As noted in our letter, Secretary of the Treasury Timothy Geithner delegated his interim authority to establish the Bureau to Professor Elizabeth Warren and other Treasury officials. Professor Warren is the Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau. According to Treasury, Professor Warren's implementation activities are overseen by Secretary Geithner, and she has regular meetings with senior Treasury officials regarding the status of start-up efforts and the priorities she has identified for the Bureau.

We noted that Treasury implemented a policy to disclose meetings regarding Bureau-related activities between senior Treasury officials, including Professor Warren, and individuals from private sector entities. In addition, Treasury noted that Professor Warren's schedule had been, and would continue to be, posted on its website.

With respect to organizational structure, we reported that the Bureau had prepared a draft organizational plan. Our report also included, as requested, the names of Treasury and Board employees and detailees in certain specified categories of positions, such as members of the Senior Executive Service, who were working to build the Bureau's infrastructure. To support implementation activities, the Bureau requested and received from the Board nearly $33 million. With regard to the regulatory agenda, Professor Warren provided examples of two policy initiatives that will receive priority: (1) consolidating duplicative and overlapping mortgage disclosure forms mandated by the Truth in Lending Act and the Real Estate Settlement Procedures Act and (2) simplifying credit card agreements to ensure that customers fully understand fees and finance charges.

Finally, we reported that Treasury's interim authority extends beyond the designated transfer date if the Bureau does not have its Director in place at that time. After the July 21, 2011, designated transfer date and until the Director is confirmed, the Treasury Secretary has the authority to carry out certain functions of the Bureau, which include prescribing rules, conducting examinations, and enforcing orders. Treasury cannot, however, exercise the Bureau's newly established authorities, which include prohibiting unfair, deceptive, or abusive acts or practices. As of the end of this reporting period, the Bureau's Director had not been nominated.

In addition to our January 10, 2011, response, we provided two oral briefings to staff members of representatives on the House Committee on Financial Services.