Small Banks May Escape CFPB Enforcement, Somewhat

The smallest of banks might get a pass when it comes to Consumer Financial Protection Bureau enforcement, the CFPB’s director told a House oversight committee during a hearing this week, referencing an earlier conversation with the Independent Community Bankers of America.

That conversation, which took place via conference call and is outlined on ICBA’s website, reports that Cordray “emphasized that the bureau is focused on leveling the playing field with nonbank providers, such as mortgage brokers and payday lenders, so responsible businesses, such as community banks, can thrive and prosper.”

A question-and-answer session during the call revealed a possible two-tiered plan for the CFPB’s enforcement of banks, with respect to size or market share.

“Cordray recognized that community banks have a different business model that emphasizes customer service in the community and that community banks were therefore not responsible for the problems that led to the financial crisis,” ICBA reported. “Cordray also said the bureau will be considering two-tiered regulatory requirements and exemption thresholds as it writes regulations so that community banks will be able to conduct their business without overly burdensome regulatory requirements.”

The hearing this week marked Cordray’s first public appearance before House members since his January 4 recess appointment by President Obama. Many have speculated that the CFPB could be open to potential scrutiny and lawsuits following the controversial means by which Cordray came into the director seat.

Written by Elizabeth Ecker

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