§5514 — Title 12 Banks and Banking | U.S. Code

Summary

The Bureau of Consumer Financial Protection must supervise, examine, and require reports from certain non-bank companies that offer consumer loans or other consumer financial products. Covered companies include five groups: those that make, broker, service, or help modify home loans; big players in other consumer finance markets (as the Bureau will define by rule); companies the Bureau finds after notice are posing consumer risks; private student lenders; and payday lenders. The Bureau must use risk-based schedules that consider size, transaction volume, consumer harm, and state oversight. It must coordinate exams and information sharing with federal and state regulators, use existing federal or state reports and public data when possible, and may set rules for records, background checks, bonding, and other steps to make sure firms are real and can serve customers. The Bureau must give the IRS exam reports that suggest possible tax problems. When federal law lets both the Bureau and another agency act on the same consumer-finance rules, the Bureau generally has the main authority to enforce rules, make regulations, conduct exams, and require reports for these covered companies, with some exceptions in other parts of the law (for example sections 5515(a), 5516(a), and 5581). The Bureau must work with the Federal Trade Commission to set up an enforcement coordination agreement within 6 months after the designated transfer date, and must issue its initial rule defining big players within 1 year after that date. Service providers to covered companies are also subject to the Bureau’s supervision, and the Bureau must coordinate with banking regulators when examining them.

Title 12, §5514

Banks and Banking — Source: USLM XML via OLRC

(a)(1)Notwithstanding any other provision of this title,11 See References in Text note below. and except as provided in paragraph (3), this section shall apply to any covered person who—

(A)offers or provides origination, brokerage, or servicing of loans secured by real estate for use by consumers primarily for personal, family, or household purposes, or loan modification or foreclosure relief services in connection with such loans;

(B)is a larger participant of a market for other consumer financial products or services, as defined by rule in accordance with paragraph (2);

(C)the Bureau has reasonable cause to determine, by order, after notice to the covered person and a reasonable opportunity for such covered person to respond, based on complaints collected through the system under section 5493(b)(3) of this title or information from other sources, that such covered person is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services;

(D)offers or provides to a consumer any private education loan, as defined in section 1650 of title 15, notwithstanding section 5517(a)(2)(A) of this title and subject to section 5517(a)(2)(C) of this title; or

(E)offers or provides to a consumer a payday loan.

(2)The Bureau shall consult with the Federal Trade Commission prior to issuing a rule, in accordance with paragraph (1)(B), to define covered persons subject to this section. The Bureau shall issue its initial rule not later than 1 year after the designated transfer date.

(3)(A)This section shall not apply to persons described in section 5515(a) or 5516(a) of this title.

(B)For purposes of computing activity levels under paragraph (1) or rules issued thereunder, activities of affiliated companies (other than insured depository institutions or insured credit unions) shall be aggregated.

(b)(1)The Bureau shall require reports and conduct examinations on a periodic basis of persons described in subsection (a)(1) for purposes of—

(A)assessing compliance with the requirements of Federal consumer financial law;

(B)obtaining information about the activities and compliance systems or procedures of such person; and

(C)detecting and assessing risks to consumers and to markets for consumer financial products and services.

(2)The Bureau shall exercise its authority under paragraph (1) in a manner designed to ensure that such exercise, with respect to persons described in subsection (a)(1), is based on the assessment by the Bureau of the risks posed to consumers in the relevant product markets and geographic markets, and taking into consideration, as applicable—

(A)the asset size of the covered person;

(B)the volume of transactions involving consumer financial products or services in which the covered person engages;

(C)the risks to consumers created by the provision of such consumer financial products or services;

(D)the extent to which such institutions are subject to oversight by State authorities for consumer protection; and

(E)any other factors that the Bureau determines to be relevant to a class of covered persons.

(3)To minimize regulatory burden, the Bureau shall coordinate its supervisory activities with the supervisory activities conducted by prudential regulators, the State bank regulatory authorities, and the State agencies that licence, supervise, or examine the offering of consumer financial products or services, including establishing their respective schedules for examining persons described in subsection (a)(1) and requirements regarding reports to be submitted by such persons. The sharing of information with such regulators, authorities, and agencies shall not be construed as waiving, destroying, or otherwise affecting any privilege or confidentiality such person may claim with respect to such information under Federal or State law as to any person or entity other than such Bureau, agency, supervisor, or authority.

(4)The Bureau shall, to the fullest extent possible, use—

(A)reports pertaining to persons described in subsection (a)(1) that have been provided or required to have been provided to a Federal or State agency; and

(B)information that has been reported publicly.

(5)Nothing in this title 1 may be construed as limiting the authority of the Director to require reports from persons described in subsection (a)(1), as permitted under paragraph (1), regarding information owned or under the control of such person, regardless of whether such information is maintained, stored, or processed by another person.

(6)The Bureau shall provide the Commissioner of Internal Revenue with any report of examination or related information identifying possible tax law noncompliance.

(7)(A)The Bureau shall prescribe rules to facilitate supervision of persons described in subsection (a)(1) and assessment and detection of risks to consumers.

(B)The Bureau may require a person described in subsection (a)(1), to generate, provide, or retain records for the purposes of facilitating supervision of such persons and assessing and detecting risks to consumers.

(C)The Bureau may prescribe rules regarding a person described in subsection (a)(1), to ensure that such persons are legitimate entities and are able to perform their obligations to consumers. Such requirements may include background checks for principals, officers, directors, or key personnel and bonding or other appropriate financial requirements.

(D)In developing and implementing requirements under this paragraph, the Bureau shall consult with State agencies regarding requirements or systems (including coordinated or combined systems for registration), where appropriate.

(c)(1)Except as provided in paragraph (3) and section 5581 of this title, with respect to any person described in subsection (a)(1), to the extent that Federal law authorizes the Bureau and another Federal agency to enforce Federal consumer financial law, the Bureau shall have exclusive authority to enforce that Federal consumer financial law.

(2)Any Federal agency authorized to enforce a Federal consumer financial law described in paragraph (1) may recommend in writing to the Bureau that the Bureau initiate an enforcement proceeding, as the Bureau is authorized by that Federal law or by this title.1

(3)(A)The Bureau and the Federal Trade Commission shall negotiate an agreement for coordinating with respect to enforcement actions by each agency regarding the offering or provision of consumer financial products or services by any covered person that is described in subsection (a)(1), or service providers thereto. The agreement shall include procedures for notice to the other agency, where feasible, prior to initiating a civil action to enforce any Federal law regarding the offering or provision of consumer financial products or services.

(B)Whenever a civil action has been filed by, or on behalf of, the Bureau or the Federal Trade Commission for any violation of any provision of Federal law described in subparagraph (A), or any regulation prescribed under such provision of law—

(i)the other agency may not, during the pendency of that action, institute a civil action under such provision of law against any defendant named in the complaint in such pending action for any violation alleged in the complaint; and

(ii)the Bureau or the Federal Trade Commission may intervene as a party in any such action brought by the other agency, and, upon intervening—

(I)be heard on all matters arising in such enforcement action; and

(II)file petitions for appeal in such actions.

(C)The terms of any agreement negotiated under subparagraph (A) may modify or supersede the provisions of subparagraph (B).

(D)The agencies shall reach the agreement required under subparagraph (A) not later than 6 months after the designated transfer date.

(d)Notwithstanding any other provision of Federal law and except as provided in section 5581 of this title, to the extent that Federal law authorizes the Bureau and another Federal agency to issue regulations or guidance, conduct examinations, or require reports from a person described in subsection (a)(1) under such law for purposes of assuring compliance with Federal consumer financial law and any regulations thereunder, the Bureau shall have the exclusive authority to prescribe rules, issue guidance, conduct examinations, require reports, or issue exemptions with regard to a person described in subsection (a)(1), subject to those provisions of law.

(e)A service provider to a person described in subsection (a)(1) shall be subject to the authority of the Bureau under this section, to the same extent as if such service provider were engaged in a service relationship with a bank, and the Bureau were an appropriate Federal banking agency under section 1867(c) of this title. In conducting any examination or requiring any report from a service provider subject to this subsection, the Bureau shall coordinate with the appropriate prudential regulator, as applicable.

(f)No provision of this title 1 may be construed as modifying, limiting, or otherwise affecting the authority of the Farm Credit Administration.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This title, where footnoted in subsecs. (a)(1), (b)(5), (c)(2), and (f), is title X of Pub. L. 111–203, July 21, 2010, 124 Stat. 1955, known as the Consumer Financial Protection Act of 2010, which enacted this subchapter and enacted, amended, and repealed numerous other sections and notes in the Code. For complete classification of title X to the Code, see

Short Title

note set out under section 5301 of this title and Tables.

Amendments

2014—Subsec. (b)(3). Pub. L. 113–173 substituted “regulators, the State bank regulatory authorities, and the State agencies that licence, supervise, or examine the offering of consumer financial products or services” for “regulators and the State bank regulatory authorities” and inserted at end “The sharing of information with such regulators, authorities, and agencies shall not be construed as waiving, destroying, or otherwise affecting any privilege or confidentiality such person may claim with respect to such information under Federal or State law as to any person or entity other than such Bureau, agency, supervisor, or authority.”

Statutory Notes and Related Subsidiaries

Effective Date

Section effective July 21, 2010, see section 1029A of Pub. L. 111–203, set out as a note under section 5511 of this title.

§5514 Supervision of Nondepository Covered Persons