Update: CFPB’s future still uncertain

As we mentioned in our previous article “Will Cordray and CFPB survive the Trump administration?“, there is uncertainty around the Consumer Financial Protection Bureau (CFPB) and its current structure under the new administration. At that time, we reported that many senators had asked President Trump to dismiss CFPB Director Richard Cordray and to appoint a bipartisan commission to replace him.

According to the Financial Services Roundtable, it is now one of 22 financial industry trade groups also recommending this change to the CFPB’s structure. Other entities involved include the American Bankers Association, the National Association of Realtors, and the Consumer Bankers Association. These groups would like to replace the director with a five-person bipartisan committee.

“The current single director structure leads to regulatory uncertainty and instability for consumers, industry, and the economy, leaving vital consumer financial protection subject to dramatic political shifts with each changing presidential administration,” said the letter to lawmakers signed by the financial industry trade groups.

These organizations are hoping these changes will be included in “must-pass” government funding legislation. However, at this time, opposition from both the Democratic and the Republican parties still exists for a variety of reasons. Thus, the uncertainty continues. For more information on this matter, see the article from the Washington Examiner.

We’ll continue to update you on matters that affect you and your bank as they progress.

For now, as far as your bank is concerned…

No matter how regulations and enforcement may change, ultimate responsibility for compliance will, no doubt, rest with management and the board. Each bank should have a top-down approach to compliance to ensure that employees understand the importance of regulatory compliance and their role in the process. Ongoing training is imperative, not just for employees, but for management and board members as well.

Banks should proactively implement Interagency guidance to administer an effective, risk-based approach to compliance management. Each institution’s compliance management system should focus on the products they offer to their customers and the way they identify, manage, and even prevent potential compliance problems. If the compliance management system is sound and operating effectively, the bank should be well positioned to identify potential issues and handle them internally, prior to regulatory oversight. Come what may, a well-oiled system and culture of accountability will help prepare the Bank for regulatory change.

As always, the KraftCPAs banking team is available to help if you have questions or concerns. You may reach a member of our banking team at (615) 242-7351.

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