Joint Comments to CFPB on the Proposal to Rescind "Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders"

Dear Acting Director Vought:

We appreciate the opportunity to respond to the CFPB's proposal to rescind the rule adopted on July 8, 2024, "Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders," and codified in 12 CFR part 1092. The rule requires certain types of nonbank covered persons subject to certain final public orders of a government agency to report the existence of the orders and related information and to file annual compliance reports. The rule also requires supervised nonbanks to submit an annual written statement regarding compliance with each underlying order, signed by an attesting executive.

Although the requirements generally are aimed at nonbanks, when the CFPB proposed the rule, the Associations raised concerns about certain aspects of the proposal. We attach the comment letters we submitted in response to the 2023 proposal in Appendix B. In brief, we raised the following concerns in our comments:

First, while the rule proposed to require nonbanks to register with the Bureau, the Bureau's press release issued in connection with the proposal stated that the Bureau may later require the same information from insured banks and credit unions. However, we highlighted that the Bureau cannot require banks to register. The Consumer Financial Protection Act clearly exempts insured depository institutions (IDIs) from the CFPB's registration authority, stating, "[t]he Bureau may prescribe rules regarding registration requirements applicable to a covered person other than an insured depository institution, insured credit union, or related persons." Furthermore, even if the CFPB had the authority to require IDIs to register, there is no reason to impose such a requirement. As we noted, the prudential banking regulators – and the CFPB itself – maintain lists of the entities subject to their respective supervision and examination and maintain a significant amount of information about IDIs, including consent orders and other supervisory or enforcement actions. Therefore, imposing such a requirement on IDIs would create a substantial burden for IDIs with no additional supervisory benefit.

Second, we raised concerns that the proposed rule could be interpreted as stating that only insured depository institutions – and not holding companies and nonbank affiliates – would be exempt from the registration requirements under the proposed rule. For the same reasons such a requirement is unnecessary for IDIs, a registration requirement for IDI holding companies and affiliates is unnecessary and would provide no incremental supervisory benefit. As entities subject to consolidated supervision by the prudential banking agencies, these entities' identities, and activities, including any consent orders or enforcement actions to which they are subject, are well-known to the banking agencies and other regulators from whom the CFPB may obtain such information. Furthermore, the CFPB itself has supervisory and examination authority over banks with more than $10 billion in total assets and their affiliates.

Finally, we raised various concerns about the proposed requirement that registered nonbanks subject to Bureau supervision must designate a senior executive to (i) describe his or her review and oversight of the entity's activities subject to the applicable covered order, and (ii) attest whether, to the executive's knowledge, the entity has identified any violations or noncompliance with any of the obligations imposed by public order.

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We appreciate the opportunity to comment on the proposed rescission of the establishment of the nonbank registration requirement. If you have any questions or would like to discuss our comments further, please contact the undersigned by phone at 703-887-5229 or by email at [email protected].

Sincerely,
Bank Policy Institute
American Bankers Association
Consumer Bankers Association