At the Senate Banking Committee hearing titled, “Fostering Economic Growth: Regulator Perspective,” Acting Comptroller Keith Noreika suggesting minimizing regulatory inefficiency by addressing the overlap in oversight of insured depository institutions (IDIs) with more than $10 billion in asset size.

According to Noreika, a division of authority is given to the Consumer Financial Protection Bureau (CFPB) and the IDIs’ prudential regulator.

“There are many options Congress could consider to address this overlap,” Noreika stated within his written testimony. “For example, Congress could return examination and supervision authority with respect to federal consumer financial laws to the federal banking agencies for the institutions that they otherwise have jurisdiction to supervise, without regard to an institution’s asset size.” 

Under this approach, Noreika said, the CFPB would continue to set the standards with respect to the federal consumer financial laws, supervise non-depository institutions and take enforcement action.

Depository institutions would have a single supervisor overseeing compliance with federal consumer financial and other laws, as well as their safety and soundness, reinforcing the interdependency between sound banking practices and fair treatment of a bank’s customers. 

“As is the case today, the primary prudential regulator would retain enforcement authority with respect to institutions at or under $10 billion in asset size,” Noreika wrote. “The primary regulator also would retain the current ‘back-up’ enforcement authority with respect to institutions over $10 billion in asset size, which enables it to bring an enforcement action when warranted if the CFPB declines to do so.”

Noreika argued that this approach would reduce regulatory burden and provide regulatory certainty by eliminating the need for an institution to prepare for multiple, potentially overlapping examinations and to meet the differing expectations of multiple regulators. 

Noreika added that this approach also could result in a more effective deployment of limited regulatory resources and facilitate more effective and efficient supervision with existing resources. 

“In this regard, it may be useful — either as the predicate for or an alternative to this revision to current law — for Congress to require a study of how the CFPB’s authorities are currently used. It has been the OCC’s experience that the CFPB has focused its examination and supervisory resources primarily on the largest banks that serve the greatest number of consumers,” Noreika wrote. “If that observation is accurate, then returning supervisory responsibility to the primary regulator should result in a more appropriate level of oversight for midsize institutions.”