The Consumer Financial Protection Bureau needs to improve the efficiency of its program for direct supervision of banks and non-banks, a federal watchdog said today.
The inspector general at the Federal Reserve, which audits CFPB activities, said the agency, created by the 2010 Dodd-Frank law, has failed to meet its own timeline for completing examination reports. The documents, which give companies feedback about their compliance with federal consumer protection laws, have generally been delayed at every step of the process, the inspector general said.
"While we recognize the considerable efforts associated with the initial development and implementation of the program, we believe that the CFPB can improve the efficiency and effectiveness of its supervisory activities," the inspector general wrote.
As part of its mandate to protect consumers, CFPB directly examines banks with assets greater than $10 billion, including JPMorgan Chase & Co. and regional companies like Regions Financial Corp. The CFPB, an independent agency funded by the Fed, also supervises non-depository financial firms, such as payday lenders, mortgage originators and student-loan servicers.
The speed of CFPB examinations have been a source of complaints by banks, and the report reflects their grievances. The agency's own 110-day timeline, which is broken up into several sections, was seldom met, the inspector general found.
Most reports 59% were not submitted to superiors by the examiners within 30 days of completing fieldwork, as required by the CFPB timeline. Also, 54 of 60 exam reports weren't approved by headquarters in Washington within the 30 days.
The inspector general looked at data from examinations between July 2011, when supervision began, and July 2013.
In a response included in the report, CFPB Deputy Director Steven Antonakes said the agency has achieved a "substantial reduction" in the number of outstanding examination reports.
Antonakes also said that examinations by the bureau "address the numerous novel issues that often arise in CFPB examinations without sacrificing consistency across regions and types of institutions."