CSBS Issue Briefings - January 2020

CSBS ISSUE BRIEFING

Talking Points •

States and federal regulators have a long-standing agreement to coordinate in compliance supervision: In 1996 state and federal regulators signed the Nationwide State/Federal Supervisory agreement and accompanying protocol, which established a framework for coordinated examinations and enforcement, regardless of exam type. • The 1996 agreement recognized that an institution’s consumer compliance functions have a critical impact on its safety andsoundness. • Even for states that do not have the resources or desire to conduct compliance exams, the state, as the chartering authority, must have the unconditional ability to fully participate in meetings and receive examination findings related to compliance issues. • State regulators believe that federal regulators should adopt more stringent expectations regarding the duration ofexaminations. • State regulators have been pushing for a consistent approach to fair lending supervision. The recent creation of interagency HMDA exam procedures is a step in the right direction. • Federal regulators should issue guidance to the industry regarding the use of models for fair lending analysis and to establish regulatory expectations for market pricing variations. • Congress should amend the statutory requirement mandated by the Equal Credit Opportunity Act (ECOA) for federal banking regulators to refer ECOA violations to DOJ. Federal banking regulators should be empowered to review and resolve potential fair lending issues without being obligated to refer all cases to theDOJ. • At the September 2019 FFIEC Council Meeting, FFIEC Chairman and CFPB Director Kathy Kraninger noted her interest in reinstating coordinated interagency collaboration on fair lending statistical analysis between the FFIEC and other agencies including DOJ, HUD, and FTC. A kick- off meeting has been scheduled for Jan. 27, 2020. Economists from each agency and CSBS have been invited to participate in the group. The goal is to identify the degree to which different agencies use different fair lending analytical approaches for examinations.

SME Contact: Daniel Schwartz, Director of Policy Development, (202) 728-5742, Dschwartz@csbs.org

Date Updated: 01/09/2020

FOR STATE REGULATOR USE ONLY