WASHINGTON — Regulatory cooperation is the key to navigating the division of responsibilities that the Dodd-Frank Act made to bank regulation, Comptroller of the Currency Thomas Curry said Wednesday.
In a speech to consumer compliance examiners from all the regulators, Curry said the Consumer Financial Protection Bureau is "the specialist" examiner while the other three banking agencies are "the general practitioner."
"I know that's an imperfect analogy, but it does illustrate how we can forge a good working relationship and why that relationship matters," said Curry in the first Federal Financial Institutions Examination Council's conference for consumer specialists in at least 15 years. "I believe that our examinations can help inform the bureau's supervisory work, and that the bureau's insights can help us do our job."
Since the CFPB was formed more than two years ago, regulators have had to shift some existing rules and supervision to the bureau while still maintaining all their authority over banks with less than $10 billion of assets.
While the CFPB only has the power to directly examine larger institutions, the rules it writes still apply to smaller institutions, and are enforced by the OCC, Federal Reserve and Federal Deposit Insurance Corp.
That requires the agencies to work together closely, Curry said, pointing to areas like credit cards and fair lending that need more collaboration.
"While the credit card issues involves coordination of separate responsibilities in a straightforward way, some of the divisions of responsibility in Dodd-Frank are less easy to understand and may require even greater care in communication and coordination," he said. "I'm thinking of fair lending, for example, as an area where we will definitely need to work together."
Under Dodd-Frank, rulemaking for the Equal Credit Opportunity Act (ECOA) was transferred to the CFPB while HUD retains the Fair Housing Act. The CFPB also received supervisory authority for ECOA exams for institutions with more than $10 billion of assets, which was previously performed by the OCC. But Curry was quick to point out that their agency would continue monitoring such activities.
"Let me assure you, however, that even though there has been a change in our supervisory authority in the fair lending area for larger banks, we won't ignore evidence of discrimination," Curry said. "If we receive information or a complaint alleging a Fair Housing Act violation at a larger bank, we will notify HUD and DOJ as appropriate."
Curry also cautioned examiners not to lose sight of compliance after credit quality consumed many bank reviews following the financial crisis. He specifically stressed mobile banking as a new risk to existing compliance rules like the Bank Secrecy Act. Phones used for banking are subject to viruses and messages between the bank and customer may not be encrypted or remain in memory after deletion, he said.
"Given these challenges, cases of unauthorized account use will be difficult to resolve so, at a minimum, banks will have to provide disclosures that emphasize potential risk or develop new risk management procedures," Curry said. "Technology is making the world of compliance supervision even more complicated, and you, the men and women on the front lines, will have to work hard to stay on top of these emerging risks."