Banks, meet the new "cop on the beat."
The federal Consumer Financial Protection Bureau (CFPB) has outlined its plan to supervise the nation's large banks and other depository institutions.
Elizabeth Warren, special adviser to the secretary of the Treasury on the CFPB, said in a statement that the consumer agency is "here to make sure that markets work for American families" and that the bank supervision program is "a big part of that."
"Starting on July 21," she said, "we will be a cop on the beat -- examining banks and protecting consumers."
The agency plans to conduct examinations to help ensure that large banks' consumer financial practices conform with legal requirements. The program will oversee 111 depository institutions that have total assets of more than $10 billion, plus subsidiaries and affiliates of these institutions. Collectively, these institutions hold more than 80 percent of the banking industry’s assets, according to a CFPB statement.
Examiners in satellite offices in Chicago, New York, San Francisco and Washington, D.C., will "form the front line" in the supervisory efforts, each office being the nexus for supervision in its respective area of the country, the CFPB said. The agency expects to eventually have several hundred examiners, with more than 100 staff members transferring from the Federal Deposit Insurance Corporation, Federal Reserve System, Office of the Comptroller of the Currency and Office of Thrift Supervision.
Most institutions will be examined only periodically, but the largest and most complex banks will be subject to a year-round supervision program.
Examiners will look at products and services with a focus on risk to consumers. Compliance with requirements during the entire life cycle will be reviewed, including how a product is developed, marketed, sold and managed. Fair lending reviews will be conducted to detect and address potential discriminatory practices, and policies and practices will be evaluated to ensure compliance with consumer financial protection laws and regulations.
If a bank isn't compliant, the CFPB will seek corrective actions, including strengthening programs and processes to ensure violations don't recur and remedies are instituted. When necessary, examiners will coordinate with CFPB enforcement staff to address harm to consumers.
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