Joint Trade Comment on CFPB’s Proposal to Rescind Nonbank Covered Persons Rule

Dear Acting Director Vought:

We appreciate the opportunity to respond to the CFPB's proposal to rescind the rule adopted on July 8, 2024, "Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders," and codified in 12 CFR part 1092.^[1] The rule requires certain types of nonbank covered persons subject to certain final public orders of a government agency to report the existence of the orders and related information and to file annual compliance reports. The rule also requires supervised nonbanks to submit an annual written statement regarding compliance with each underlying order, signed by an attesting executive.

Although the requirements generally are aimed at nonbanks, when the CFPB proposed the rule, the Associations raised concerns about certain aspects of the proposal. We attach the comment letters we submitted in response to the 2023 proposal in Appendix B. In brief, we raised the following concerns in our comments:

First, while the rule proposed to require nonbanks to register with the Bureau, the Bureau's press release issued in connection with the proposal stated that the Bureau may later require the same information from insured banks and credit unions. However, we highlighted that the Bureau cannot require banks to register. The Consumer Financial Protection Act clearly exempts insured depository institutions (IDIs) from the CFPB's registration authority, stating, "[t]he Bureau may prescribe rules regarding registration requirements applicable to a covered person other than an insured depository institution, insured credit union, or related persons."^[2] Furthermore, even if the CFPB had the authority to require IDIs to register, there is no reason to impose such a requirement. As we noted, the prudential banking regulators - and the CFPB itself - maintain lists of the entities subject to their respective supervision and examination and maintain a significant amount of information about IDIs, including consent orders and other supervisory or enforcement actions. Therefore, imposing such a requirement on IDIs would create a substantial burden for IDIs with no additional supervisory benefit.

To read the full comment letter, please click here, or click on the download button below.

[1] 89 Fed. Reg. 56028 (July 8, 2024). A description of the Associations is contained in Appendix A.

[2] 12 U.S.C. § 5512(c)(7).