In response to a series of complaints lodged by the banks
supervised by the Consumer Financial Protection Bureau (CFPB), the
Officer of Inspector General (OIG) recently issued a 40-page report
taking the CFPB to task for inconsistent and inefficient
supervisory activities. Complaints ranged from an excessively slow
examination process to the CFPB's failure to adhere to its own
mandate of a 110-day deadline for completing reports. OIG completed
its fieldwork in October 2013, based on data as of July 31,
2013.
The full report, titled "
The CFPB Can Improve the Efficiency and Effectiveness of its
Supervisory Activities," cites eight specific areas
requiring improvement. Among other things, the OIG found that
nearly 60 percent of CFPB report drafts submitted to headquarters
during the investigation and 90 percent of drafts that received
headquarters approval failed to meet CFPB's own timeliness
requirements. According to the OIG, this "inability to provide
examination reports to institutions in a timely manner creates
uncertainty for supervised institutions."
OIG also cited deviations from examination manual templates as not
supportive of consistency in the examination process. Furthermore,
it found that CFPB failed to consistently record completion of
examination milestones in a timely manner. In the absence of an
established requirement for timely recording examination data, OIG
used a seven-day standard and found untimely documentation in at
least one-quarter of the instances for each of the key milestones
reviewed. In eight cases, milestones were recorded more than 200
days after their occurrence. Other issues related to CFPB's
communication with prudential regulators, its inability to
determine the most effective processes for reviewing examination
reports, inconsistent scheduling practices and failure to track
examiners' completion of training. Finally, OIG cited room for
improvement in the way CFPB coordinated the exchange of information
with prudential regulators.
In its executive summary, the OIG lists 12 recommendations designed
to strengthen the overall supervision program, focusing on creating
and updating relevant policies and procedures, tracking/monitoring
examination processes for staffing examinations, producing
examination products and finalizing the CFPB examiner commissioning
program. OIG also gave CFPB management an opportunity to respond to
the report, and noted that management agreed with the
recommendations and outlined actions that have addressed or will
address them. There is no indication that the recommendations will
be addressed by any certain date. Notwithstanding, OIG reports that
it plans to follow up to ensure that each recommendation is
"fully addressed."
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