ONTARIO, Calif.–The California League has joined with the California Bankers Association and other organizations in a letter to Gov. Gavin Newsom raising concerns around a proposal to restructure the Department of Business Oversight (DBO) into what some have called “California’s Consumer Financial Protection Bureau.”
In the letter, the organizations say they believe any revisions to the Financial Code should be subject to the typical legislative process, where “committees with the underlying policy expertise can consider the ramifications of the proposal rather than being incorporated into a truncated budget discussion that has only been shortened given the Coronavirus pandemic. Prior to the Legislature recessing, several public hearings were scheduled in the Assembly and Senate to review this specific proposal but were subsequently canceled.”
The groups say they are also concerned because their respective memberships are already subject to oversight by various California and/or federal regulators and regulatory regimens that typically include examination, investigation, and enforcement authority.
No Detailed Discussion
“We are unaware of any detailed policy discussion or analysis on how the new requirements that the proposal imposes will overlay with the comprehensive set of statutory and regulatory requirements applicable to current state licensees and state or federally charted depository institutions,” the letter reads. “We are subsequently concerned the proposal will have unintended consequences, such as significantly increasing the compliance burdens of regulated financial institutions and making it more difficult for such entities to do business in California.”
The letter goes on to say the proposal could affect the ability of credit unions, banks and other organizations to provide relief to those hit by the coronavirus and economic downturn, and that any restructuring that includes new authority to enforce against unfair, deceptive or abusive acts or practices (UDAAP) appears to be “premature.”
Where to Focus Instead
Finally, the letter calls on the state to instead focus on unregulated entities and “specific issues, concerns and statutory gaps where existing law fails to adequately provide consumer protections.”
Also signing the letter were the California Community Bank network, California Financial Services Association, California Mortgage Association and California Mortgage Bankers Association.