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Is this what Elizabeth Warren meant by more cops on the beat?

Posted in CFPB General

On March 9, I was on a panel of speakers at a City Bar Center for CLE titled “Consumer Finance Protection After Dodd-Frank:  The New Legislation’s Enhanced Enforcement Structure.”  Deepak Gupta, Senior Counsel for Enforcement Strategy at the CFPB, spoke on the same panel.  During my presentation, I raised serious concerns about a CFPB examination policy under which one or more CFPB enforcement attorneys are accompanying CFPB examiners on all CFPB exams.  I mentioned that this is unprecedented, that none of the federal banking agencies have ever done it, and that in my view it creates a chilling effect on the examination process.  Deepak confirmed that enforcement lawyers are in fact accompanying examiners on CFPB exams.  According to Deepak, the lawyers are not there to conduct exams, but rather are there to provide legal advice to the examiners who are non-lawyers.  My response to Deepak was that Peggy Twohig (who is in charge of non-bank supervision) and Steve Antonakes (who is in charge of large bank supervision) have plenty of lawyers on their staffs who could provide legal advice to the examiners and that it could be done by telephone.  This CFPB practice is intimidating and does not foster the openness that should be present during CFPB exams.  Indeed, it feeds all of the fears of the consumer financial services industry that the function of the exams is to obtain information and documents that can be used by the CFPB to launch enforcement actions, either itself, or by other federal and state enforcement agencies with whom the CFPB shares information.