On May 14, the CFPB issued a proposed rule to rescind recent amendments (here, here, and here) to its nonbank supervisory program. The amendments were designed to expand and formalize the Bureau’s process for subjecting nonbank covered persons to supervision under the Consumer Financial Protection Act (CFPA). Under the CFPA, the CFPB is authorized to supervise a nonbank covered person if it has reasonable cause to determine if the nonbank covered person was engaged in financial services-related conduct that posed a risk to consumers. Among other things, the amendments introduced a mechanism for the Director to publicly release final decisions and order.
Putting It Into Practice: If finalized, the rescission would restore the Bureau’s original 2013 procedures, eliminating mechanisms for the public release of a designation of supervisory oversight over non-banks the Bureau found posed “risk to consumers.” supervision. Opponents of the rule complained the Bureau’s procedures simply were a way to name and shame companies that objected to CFPB supervisory oversight. The proposed rollback continues the Bureau’s broader deregulatory trend, following the withdrawal of rules and guidance documents introduced under prior leadership (previously discussed here, here, and here).