The CFPB has proposed a rule to constrain when it can designate non-banks as subject to supervision. The rule is one of very narrow application: only 20 institutions have ever been so designated over 14 years.
There’s a lot of silliness with the proposed rule, which eliminates none of the uncertainty it claims to address, but here’s what’s really galling: the rule is expected to reduce the total number of exams conducted by the CFPB by no more than one! What’s more the Bureau estimates that an exam costs a non-bank about $27,000 in labor costs. So the Bureau has undertaken the promulgation of an entire rule in order to save one entity $27,000/year. It will cost the Bureau more than $27,000 to promulgate this rule, which will also increase the Bureau’s litigation risk. Talk about a waste of government resources. This might well be the most inefficient regulation I’ve ever seen.
I thought this administration was about getting rid of needless regulations. And here it is creating one. Perhaps instead of a comment letter, I should have filled out the form on Regulations.gov to “Submit Your Deregulatory Recommendations.” smh.
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