Skip to Navigation
Skip to Main content
OIG Home
OIG Home

IN THIS SECTION

Skip SHARE THIS PAGE section Skip STAY CONNECTED section

CFPB Report: 2013-AE-C-021 December 16, 2013

The CFPB Should Reassess Its Approach to Integrating Enforcement Attorneys Into Examinations and Enhance Associated Safeguards

available formats

Appendix B: Management's Response

CONSUMER FINANCIAL PROTECTION BUREAU
1700 G Street, N.W., Washington, DC 20552

November 18, 2013

VIA ELECTRONIC MAIL
Michael VanHuysen
Senior OIG Manager for Supervision and Regulation
Office of Inspector General
Board of Governors of the Federal Reserve System
Consumer Financial Protection Bureau
Washington, DC 20551

RE: CFPB Response to OIG Discussion Draft Report dated October 31, 2013

Dear Mr. VanHuysen:

Thank you for the opportunity to respond to the Evaluation Report from your office entitled, "The CFPB Should Reassess Its Approach to Integrating Enforcement Attorneys into Examinations and Enhance Associated Safeguards." We generally concur with the Evaluation Report's recommendations, which are consistent with the approach adopted by the Consumer Financial Protection Bureau (CFPB or Bureau) in our new policy related to the integration of enforcement attorneys in the supervision process, effective November 1, 2013.

As we have discussed with Office of Inspector General (OIG) staff over the course of this engagement, CFPB management has been actively engaged during the past year in reassessing its approach to integrating enforcement attorneys into examinations. CFPB staff informed OIG of this comprehensive assessment when this engagement began and have kept OIG staff informed throughout the process.

The CFPB has adopted a new policy that addresses the concerns identified in the Evaluation Report. This new CFPB policy became effective November 1, 2013. We appreciated the opportunity to brief OIG staff on this new policy prior to its effective date and OIG's adoption of the Evaluation Report. We are pleased that the OIG's recommendations match those that resulted from the CFPB's own comprehensive assessment, and that the policy changes we have implemented respond directly to OIG's concerns. We note that, to the extent the Evaluation Report describes operations inconsistent with this policy, they are no longer in effect.

Below are CFPB management's responses to each of the Evaluation Report's specific recommendations.

CFPB Management Response to Recommendations #1-3:

Recommendation #1: We concur with this recommendation, and the CFPB is addressing the concerns raised in this recommendation through its new policy on enforcement attorney integration into examinations. Throughout much of the past year, CFPB has been engaged in a comprehensive reassessment regarding the appropriate level of enforcement attorney integration into examinations. In December 2012, the CFPB's Division of Supervision, Enforcement, and Fair Lending and Equal Opportunity (SEFL) convened a working group to review existing CFPB policy regarding the integration of enforcement attorneys into CFPB examinations. The working group consisted of members from all SEFL offices, including a mix of Headquarters and field staff. The group met regularly to evaluate existing practices and discuss potential issues and solutions. The group also solicited oral feedback internally from each SEFL office and SEFL management and externally with more than 20 Chief Compliance Officers of major financial institutions.

Through this process, we determined that by discontinuing CFPB enforcement attorneys' involvement in on-site examination activities generally, and by clarifying enforcement attorneys' role in examination support, we would achieve greater efficiency and more capacity in all offices. On October 7, 2013, CFPB formally announced a new policy implementing these changes. This policy will be effective nationally, and will be implemented in CFPB headquarters operations as well as in each CFPB region.

Recommendation #2: We concur with this recommendation, and the CFPB is addressing the concerns raised in this recommendation through its new policy on enforcement attorney integration into examinations. On October 7, 2013, the CFPB formally announced its new policy. This policy defines roles and responsibilities for enforcement attorneys, examiners, and the SEFL offices; expectations regarding enforcement attorney support of CFPB examination activities; and protocols for managing documentation requests and communications with supervised entities. We also are developing consistent messaging for CFPB staff to communicate the new policy to supervised institutions as needed. In addition, CFPB is drafting additional operating procedures to implement the new policy. These operating procedures will contain appropriate monitoring and reporting requirements and other internal controls to facilitate the oversight of the effectiveness of the new policy.

Recommendation #3: We concur with this recommendation, and the CFPB is addressing the concerns raised in this recommendation through its new policy on enforcement attorney integration into examinations. Since adopting the new policy, the CFPB has conducted a series of seven training sessions, some live and some online via webinar. These sessions were mandatory for all SEFL staff. The CFPB also made available the training materials and a recording of one of the trainings to all SEFL staff on the CFPB Intranet. Staff who could not attend a training session were required to listen to the recording and certify that they had received training. As of Friday, November 15, 2013, 578 SEFL staff members, out of a total of 619 (or approximately 93 percent), had completed this mandatory training. New hires will receive appropriate training on the policy as part of the orientation process.

Once appropriate additional operating procedures with respect to the policy have been finalized, CFPB will ensure that all applicable CFPB staff receive appropriate formal training on those procedures, as well.

CFPB Management Response to Recommendation #4:

We concur with this recommendation, and the CFPB is addressing the concerns raised in this recommendation through its new policy on enforcement attorney integration into examinations. CFPB has conducted a series of mandatory training sessions for all SEFL staff, including enforcement attorneys, regarding the new policy and the role of enforcement attorneys in CFPB's examination process. This training provides greater clarity with respect to the roles of examiners and enforcement attorneys. All SEFL staff, including enforcement attorneys, have been required to participate in this training and the CFPB is ensuring compliance with this requirement.

Pursuant to the newly effective policy, CFPB enforcement attorneys generally will no longer participate in on-site examination activities. In addition, the new policy improves procedures regarding communications between enforcement attorneys and examiners by providing for enforcement attorney consultation off-site with the Office of Supervision Policy on legal questions, rather than directly with examiners in the field. CFPB's new policy thus adequately addresses the reputational and other risks identified in the Evaluation Report.

Nevertheless, we are considering additional training to further educate enforcement attorneys regarding the examination process.

CFPB Management Response to Recommendations #5-6:

Recommendation #5: We concur with this recommendation, and the CFPB is addressing the concerns raised in this recommendation through its new policy on enforcement attorney integration into examinations. The new CFPB policy limits the on-site involvement of enforcement attorneys during the course of a supervisory examination. Enforcement attorneys generally will not attend on-site examinations or obtain information directly from institutions as part of the supervisory process. Where CFPB has formally initiated an enforcement investigation, CFPB enforcement attorneys will exercise appropriate investigative authority to conduct the investigation.

Recommendation #6: We concur with this recommendation, and the CFPB is addressing the concerns raised in this recommendation through its policy on enforcement attorney integration into examinations. Under the new CFPB policy, enforcement attorneys generally will not attend on-site examinations or obtain information directly from institutions under examination as part of the supervisory process. As a consequence, enforcement attorneys do not have on-site access to institutions' systems for the purpose of conducting examinations, thus generally eliminating the concerns raised under this recommendation. Where CFPB has formally initiated an enforcement investigation, CFPB enforcement attorneys will exercise appropriate investigative authority to conduct the investigation. As with all CFPB policies, we expect enforcement attorneys and all other CFPB staff to follow the new policy regarding enforcement attorney involvement on examinations, and we will conduct the appropriate level of management oversight to ensure compliance. The CFPB is also currently drafting additional operating procedures to implement the new policy. These operating procedures will contain appropriate monitoring and reporting requirements and other internal controls to facilitate the oversight of the effectiveness of the new policy.

CFPB Management Response to Recommendation #7:

We concur with this recommendation, and the CFPB is addressing the concerns raised in this recommendation through its new policy on enforcement attorney integration into examinations. The new CFPB policy defines the roles and responsibilities of the CFPB Office of Supervision Policy points of contact and enforcement attorneys with regard to addressing different types of legal questions from examination staff. The policy also defines roles and responsibilities for CFPB's Office of Fair Lending in resolving fair-lending-related legal questions that arise during examinations. The new CFPB policy requires the Office of Supervision Policy or the Office of Fair Lending to consult with other internal parties, including the CFPB's Legal Division, as appropriate.

Very truly yours,

/signed/

Steven L. Antonakes Deputy Director and Associate Director,
Supervision, Enforcement, and Fair Lending

cc:
David Bleicken, Deputy Associate Director, Supervision,
     Enforcement, and Fair Lending
Paul Sanford, Assistant Director, Office of Supervision Examinations
Peggy Twohig, Assistant Director, Office of Supervision Policy
Anthony Alexis, Acting Assistant Director, Office of Enforcement
Patrice Ficklin, Assistant Director, Office of Fair Lending and
     Equal Opportunity