The Consumer Financial Protection Bureau (CFPB) signed a memorandum of understanding (MOU) on Tuesday with state banking regulators to coordinate supervision and implementation of consumer protection rules.
The MOU marks the first formal coordination effort between the states and CFPB, which will split supervision of state-chartered banks with more than $10 billion of assets and non-depository financial institutions.
"Starting today we will work together to promote consistent examination procedures of institutions to make sure effective enforcement of state and federal consumer laws, to minimize regulatory burden and to efficiently deploy regulatory resources," said Elizabeth Warren, assistant to the president and special advisor to the secretary of the Treasury.
Warren said the CFPB can learn from the states on areas like mortgage servicing.
"We've all been confronted recently with ample evidence of haphazard and possibly illegal practices of mortgage servicing companies that have called into question home mortgage foreclosures," Warren said. "An interagency task force of the Obama administration is working to get to the bottom of these issues and many of the here today are a part of the multi state committee which is examining actions of servicers across the country. I commend them for the work they have done thus far. We can learn from the CSBS efforts and what they have seen on the ground. We are hopeful these lessons will inform the bureau and the agency going forward."
Thomas Gronstal, chairman of the Conference of State Bank Supervisors and head of the Iowa Division of Banks, said the alliance provides inherent advantages
"The industry will benefit from the coordinated examinations, consistent procedures and guidelines, and improved efficiency," Gronstal said. "State regulators are aware of the negative impact of excessive uncoordinated regulation can have on the industry, the economy and consumers themselves."
The MOU aims to promote consistent examination procedures and enforcement of consumer protection laws. It states that state regulators and the CFPB will consult each other regarding standards, procedures and practices used by state regulators and the CFPB to coordinate examinations.
Warren said the coordination with the states will be key to the CFPB.
"The success of this bureau will depend in part on the successful partnerships with those who have been on the front lines especially during the financial crisis in recent years," she said. "The CSBS and state regulators have helped and continue to help emerging issues in states. They are often the first on the ground to flag these issues regarding consumer products that protect American families and working steadfastly to protect American consumers."