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CFPB Report: 2014-SR-C-013 September 29, 2014

The CFPB Complies With Section 1100G of the Dodd-Frank Act, but Opportunities Exist for the CFPB to Enhance Its Process

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Appendix C: Managementís Response

1700 G Street NW, Washington, DC 20552

September 23, 2014

Mr. Mark Bialek
Inspector General
Board of Governors of the Federal Reserve System
and Consumer Financial Protection Bureau
20th Street and Constitution Avenue, NW
Washington DC 20551

Dear Mr. Bialek,

Thank you for the opportunity to respond to the Office of Inspector General's draft report:  The CFPB Complies With Section 1100G of the Dodd-Frank Act, but Opportunities Exist for the CFPB to Enhance Its Process.  We are pleased with your finding of commendable action for the steps the CFPB has taken to comply with section 1100G of the Dodd-Frank Act,1 which requires the CFPB to conduct a regulatory flexibility analysis to assess significant economic impacts of a rule on small business entities, including any significant increase in the cost of credit to small businesses, and to convene small business review panels prior to issuing certain rules.

We appreciate that your evaluation has verified that, throughout the course of its rulemaking activities, the CFPB complied with section 1100G provisions regarding the regulatory impact and cost-of-credit analysis for small entities and small business review panels.  We also appreciate your recognition that the interim policies and procedures the Bureau developed for conducting the required regulatory impact analyses and small business review panels are consistent with the provisions of section 1100G, and that the Bureau has complied with these policies and procedures.

As the CFPB has worked to develop and issue regulations to implement the Dodd-Frank Act, it has actively sought to understand the impacts of its actions on small businesses, consider alternatives that would minimize any impacts on small entities, and integrate direct advice and input from small businesses into the rulemaking process. As noted in the report, the CFPB emphasizes a rigorous and multidisciplinary evidence-based approach to rulemaking. The small business review panels and regulatory analysis the CFPB has undertaken pursuant to Section 1100G is a critical component of this effort.

The report contains specific suggestions regarding additional enhancements to the CFPB's 1100G process.  We concur with the recommendations made in the report and welcome the opportunity to build on the successes achieved to date as we continue to develop our 1100G processes.  Our Management's Response provides the CFPB's perspective on the recommendations made in the report, highlights enhancements made since your review, and outlines our proposed approach for implementing your suggestions.



David Silberman
Associate Director
Division of Research, Markets, and Regulations

Recommendation #1:
Finalize Interim Guidance on Regulatory Analysis for Substantive Rulemakings Under the Dodd-Frank Act and Interim Guidance on the Small Business Review Panel Process under the Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act and the Dodd-Frank Act based on lessons learned since the implementation of these two guidance documents.  Among other things, the final documents should address

    1. procedures for certifying that a rule would not have a SISNOSE.
    2. knowledge sharing and transfer within rulemaking teams.
    3. the importance of meeting statutory deadlines.
    4. the implementation of preventative internal controls that could minimize the risk of noncompliance with statutory deadlines.
    5. measures for monitoring statutory rulemaking compliance.

Management's Response to Recommendation #1
We appreciate the report's acknowledgement of the extensive efforts the CFPB has undertaken to comply with the requirements of section 1100G of the Dodd-Frank Act and its compliance with interim internal policies and procedures.  As noted in the report, the CFPB currently has an opportunity to assess the lessons learned from issuing proposed and final rules over the last two years and issue updated, final guidance.  The report recognizes that since the conclusion of the OIG's fieldwork, the Division of Research, Markets, and Regulations (RMR) has reevaluated and reissued finalized versions of its internal policies and procedures on regulatory analysis and the small business review panel process.  Among other things, the updated policies provide clarification on the final rule certification memorandum process.  The CFPB welcomes the opportunity to further assess and enhance its internal policies and procedures on section 1100G requirements.  The CFPB will continue to, as recommended, update and refine its internal guidance as necessary to clarify and address the specific items suggested in the report.

Recommendations #2 and #3
We recommend that the Associate Director of RMR

2.  Establish a standard approach to managing electronic documents that facilitates retrieval of rulemaking supporting documentation.

3.  Work with the Chief Administrative Officer and Chief Information Officer to ensure that the standard approach complies with the CFPB's Policy for Records Management, in addition to other applicable provisions, such as the Federal Records Act and National Archives and Records Administration regulations, specifically 36 C.F.R. part 1236, Electronic Records Management.

Management's Response to Recommendations #2 and #3:

As noted in the report, the CFPB has maintained documentation associated with its rulemakings in a centralized repository on a proprietary shared drive.  The report observes that rulemaking teams create electronic folders to store information related to the rulemakings in process and recommends that the CFPB develop and implement a standard file structure and classification system to facilitate retrieval of the information.  We agree that the adoption of a formal file structure by RMR would be an effective tool to facilitate the retrieval of information, and would help memorialize and standardize current practices.  As it designs and implements its operations plan for fiscal year 2015, RMR will establish the recommended approach to file and document management and incorporate it into its processes.   As recommended, RMR will consult with the Chief Administrative Officer and Chief Information Officer, as well as the Records Management Office, to ensure that the approach developed complies with applicable CFPB policies and the requirements of federal records laws and regulations. 

In addition, the CFPB has begun to plan for the implementation of an enterprise-wide system for the management of electronic documents.  The CFPB has formed a Bureau-wide document management working group, led by the Technology and Innovation Team (T&I) and comprised of representatives from RMR, the Operations Division (which includes the Administrative Operations and Records offices), and other divisions and offices, to assess and evaluate potential tools for document management.  RMR representatives will participate in this working group as part of RMR's efforts to promote a consistent approach to managing electronic documents and to facilitate the retrieval of information.

  • 1. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, Title X, § 1100G, 124 Stat. 2112, 2113 (2010) (codified at 5 U.S.C. §§ 603-604, 609 (2010)).Return to text