Thursday, February 19, 2015

Deputy Director Provides Insight to CFPB Enforcement Philosophy

In his prepared remarks to the Washington D.C. Exchequer Club, CFPB Deputy Director Steven Antonakes provided insight into the CFPB’s enforcement philosophy.  Antonakes, a career regulator, leads the CFPB’s Division of Supervision, Enforcement, and Fair Lending.  Antonakes acknowledged that the CFPB focuses on risks to consumers rather than risks to institutions and that the CFPB conducts its examinations by product line rather than taking an institution-centric approach.  Here are the key take-aways:

·         Product lines are evaluated based on:

o   The potential for consumer harm related to a particular market

o   The size of the product market

o   The entity’s market share; and

o   Risks inherent to the entity’s operations and offering of consumer financial products within that market.

·         Risk is assessed on two levels:

o   The market level – particularly, when the consumer cannot choose their provider of financial products;

o   The institution level – particularly, considering the institution’s market share

·         Debt collection and credit reporting were two markets singled out as high risk.  Antonakes noted that with respect to debt collection, it is the single largest category of complaints received by the CFPB’s Consumer Response Office. 

·         As to the institution level analysis, the assessment of relative risks to the consumer takes into account a number of factors, including:

o   The institution’s market share within an individual product line;

o   Strength of compliance management systems; and

o   Prior regulatory actions.

·         Antonakes acknowledged that the CFPB prioritizes relatively large players with a more dominant presence in the market.

·         When reviewing violations, the CFPB takes into account the following:

o   Violation Focused Factors-

§  The number of consumers affected

§  Magnitude of harm

§  Nature of the violation

§  Whether the violation is ongoing or has ceased

§  The value of deterrence – Antonakes noted that “[i]f we suspect a troubling practice is widespread, we may want to put the entire industry on notice through public enforcement actions.”

o   Institution Focused Factors –

§  The entity’s level of cooperation with the CFPB

§  Whether the entity has self-corrected

o   Policy Focused Factors-

§  Historical treatment of similar violations

§  Other CFPB activity related to the conduct

§  Consistency with the CFPB’s priorities and goals

The Exchequer Club of Washington, D.C. is an association of senior level professionals with a primary interest in national economic and financial policy.  The full content of Antonakes’ prepared remarks can be found here:



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