Tuesday, January 4, 2011
Federal and State Regulators Plan to Coordinate Regulation of Consumer Financial Products and Services
The Consumer Financial Protection Bureau (CFPB) implementation team currently housed within the US Department of the Treasury and the Conference of State Bank Supervisors (CSBS) today signed a memorandum of understanding (MOU) to establish a foundation of state and federal coordination and cooperation for supervision of providers of consumer financial products and services. According to the announcement,
Specifically, state regulators and the CFPB will endeavor to promote consistent examination procedures and effective enforcement of state and federal consumer laws and to minimize regulatory burden and efficiently deploy supervisory resources. Further, the MOU provides that state regulators and the CFPB will consult each other regarding the standards, procedures, and practices used by state regulators and the CFPB to conduct compliance examinations of providers of consumer financial products and services, including non-depository mortgage lenders, mortgage servicers, private student lenders, and payday lenders.
.... This MOU is an important step in implementing this balance and provides a starting point for additional state agreements as the states and the CFPB work to fulfill their mandates. Whether shopping for a mortgage for their first home or exploring possibilities to finance their child’s education, consumers will benefit from this partnership as the CFPB and CSBS coordinate efforts to enforce applicable federal and state law and to protect consumers. For the first time, a federal agency with the sole job of looking out for consumers as they interact with the financial system will work with state regulators to review businesses’ practices and ensure that firms that provide consumer financial products, such as mortgages, are following the law.