WASHINGTON – Both NAFCU and CUNA have sent comment letters to the BCFP offering suggestions on how to improve the Bureau’s civil investigative demands (CIDs).
In its letter, NAFCU’s Director of Regulatory Affairs, Alexander Monterrubio, detailed potential improvements in three categories of the CID process:
- Specific Information on Purpose and Scope: Monterrubio notes that contrary to principles for regulating the U.S. financial system, the BCFP has in the past used CIDs "as a means to request materials in an ambiguous manner by issuing broad statements of purpose for its investigations. NAFCU recommends the Bureau amend its CIDs procedures to ensure specific details of the acts and practices under investigation are included, and include the specific scope of materials the financial institution under investigation should turn over to the Bureau along with an explanation of how the materials are related to allegations and the investigation.
- Appeals and Modifications of CIDs: Under current processes, Monterrubio says that institutions have a limited timeframe to request to modify a CID and confidentiality is not guaranteed if a CID is petitioned, representing a reputational threat. NAFCU recommends the Bureau work to protect confidentiality so institutions can challenge potentially erroneous or unlawful premises of a CID and also allow petitions to be filed at any point during an investigation to ensure a fair process.
- Bolster Meet-and-Confer Processes: "[T]he CID process is an invasive and burdensome action on the part of the federal government. It should be used thoughtfully and deliberate manner," Monterrubio writes. NAFCU recommends meet-and-confer policies are amended to ensure productive, mutually beneficial discussions between the BCFP and institutions regarding CID modifications.
CIDs are issued by the BCFP when the Bureau suspects a financial institution is violating consumer protection laws. Through the RFI, the BCFP sought information on how its processes related to CIDs can be updated, streamlined or revised so the Bureau can better meet its statutory and regulatory objectives, while also minimizing existing burdens.
CUNA’s View
Similarly, in its letter, CUNA pressed many of the same themes.
“CUNA recognizes that aggressive use of CIDs may be necessary to investigate activities of profit-driven financial institutions and individuals that are engaging in fraud or other serious violations,” the letter reads. “However, credit unions genuinely wish to meet or exceed regulatory requirements designed to protect consumers and will cooperate with reasonable Bureau inquiries. Current Bureau CID processes do not have policies or procedures that protect legitimate financial institutions, such as credit unions, from unwarranted government intrusion.”
CUNA also noted:
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While it is reasonable to require that a CID recipient contact BCFP investigators within 10 days of receiving a CID, institutions cannot meaningfully meet and confer about the CID’s specific requests within 10 days. This leads to inefficiency in the investigations and waste of resources
- CID statements of basis and purpose of investigations can be improved by requiring the CID to:
- Identify the institutional product lines under review
- Specify applicable enumerated statutes
- Articulate the specific conduct under investigation—particularly when the Bureau is relying upon theories of unfair, deceptive, or abusive acts or practices
- Specify when substantially assisting the violations of another covered person is at issue
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Specify when the Bureau is investigating as to whether an individual director or officer may be personally liable for violations.