The new Consumer Financial Protection Bureau established under the Dodd-Frank Act will be working closely with state regulators to supervise mortgage lenders and servicers.
The Bureau's implementation team and the Conference of State Bank Supervisors signed a memorandum of understanding Tuesday that establishes a cooperative state and federal effort for the sharing of information related to the supervision of companies that provide consumers with financial products and services. In addition to the standard banking and lending institutions, these providers include non-depository mortgage lenders and mortgage servicers, as well as private student lenders, and payday lenders.
The Consumer Financial Protection Bureau (CFPB) is currently housed within the U.S. Department of the Treasury. Elizabeth Warren is special advisor to the secretary of the Treasury on the Bureau and head of the steering committee responsible for establishing the new agency and getting it up and running.
Commenting on the agreement reached, Warren said, ""The new consumer financial agency and the state banking regulators are forging an alliance to protect
American families. This agreement allows us to bring thousands of financial service providers out of the shadows and to begin the process of ensuring that all lenders comply with the same basic rules.""
The Treasury described the newly signed memorandum of understanding as an ""important step"" in striking a ""constructive balance between federal and state regulation of firms"" that provide consumer-facing financial products, and as a ""starting point for additional state agreements as the states and the CFPB work to fulfill their mandates.""
Specifically, the Bureau will work with state regulators to review businesses' practices and ensure that firms providing consumer financial products, such as mortgages, are following all applicable federal and state laws. They will coordinate with one another on the standards and procedures for compliance exams as well as enforcement actions.
state regulators and the CFPB will endeavor to promote consistent examination procedures and enforcement of state and federal consumer laws and to minimize regulatory burden and efficiently deploy supervisory resources.
Officials say the partnership is a plus for lenders and servicers because it will minimize the regulatory burden that comes with a patchwork of supervisory agencies with their own individual agendas and directives.
""Today is an important day for financial supervision,"" said Thomas Gronstal, chairman of the Conference of State Bank Supervisors. ""The formalized coordination between the states and the federal governmentÃ¢â‚¬Â¦will do much to create a comprehensive and seamless system of financial supervision and is a step toward a more cooperative system of supervision, which will benefit consumers and financial services providers alike.""