WASHINGTON —
The head of the new U.S. financial protection agency is fending off criticism that the presence of enforcement staff during routine inspection visits to banks is an intimidation technique.
Banks and their lobbyists have complained that, when the Consumer Financial Protection Bureau staff tasked with regularly supervising lenders show up at their offices, they bring with them the agency lawyers charged with dishing out punishment when rules and laws are broken.
“This practice feeds the institutional fear that the CFPB’s main purpose or object during an exam is to obtain documents and information that later can be used to launch an enforcement action,” Republican Rep. James Renacci said at a House Financial Services Committee hearing Thursday.
Renacci said the banking industry has voiced concerns to him.
Industry officials have said that supervisors from other banking regulators do not often show up with the enforcement staff and wondered whether intimidation is the goal.
“Sort of like showing up to a Sunday school picnic with a 12-gauge shotgun,” said Steve Bartlett, head of lobbying group The Financial Services Roundtable, at a U.S. Chamber of Commerce event this week.
On Thursday, Richard Cordray, director of the bureau, said the banking industry and concerned lawmakers should relax.
“It’s not an attempt to create some sort of macho message that we’re sending,” he said at a House Financial Services Committee hearing. “People shouldn’t read any message into that, and none is intended.”
Cordray said he has explained to bank chief executives that the supervisory and enforcement staffs are trying to get a better idea of how the other operates as the bureau, which opened in July, gets started.
“We want the supervision teams to understand where enforcement works and why and how,” he said. “We want the enforcement team to understand how supervision and examinations work.”
The bureau was created by the 2010 Dodd-Frank financial oversight law to prevent the lending abuses that occurred in the run up to the 2007-09 financial crisis.
