Joint Letter to the CFPB on the Legal Standard Applicable to Supervisory Designation Proceedings

To Whom It May Concern:

The Consumer Bankers Association (CBA) and the American Bankers Association (ABA) appreciate the opportunity to respond to the request for comment on the proposal by the Consumer Financial Protection Bureau (CFPB) to adopt a standard definition of "risks to consumers with regard to the offering or provision of consumer financial products or services" that will bind the CFPB in proceedings to designate nonbank covered persons for CFPB supervision (the Proposed Rule). While CBA and ABA support efforts to provide regulatory clarity, particularly in the context of supervision and enforcement, CBA and ABA caution that adopting the Proposed Rule could create gaps in the supervision of market participants, potentially resulting in consumer harm. Accordingly, CBA and ABA respectfully recommend that the CFPB refrain from adopting the Proposed Rule and instead retain its current flexible framework.

The CFPB Has a Congressional Mandate to Ensure Consistent Enforcement of Federal Consumer Financial Laws

In creating the CFPB, Congress established that the CFPB's primary objectives under Section 1021 of the Dodd-Frank Act include ensuring that "Federal consumer financial law is enforced consistently, without regard to the status of a person as a depository institution, in order to promote fair competition." Congress enacted this provision because the mere existence of consumer protection laws and regulations does not ensure compliance with those laws. Instead, the laws must be enforced fairly, comparably, and transparently to ensure that legal and regulatory obligations are observed.

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