The federal banking regulators recently took their first official Dodd-Frank rulemaking step, inviting public comments in advance of proposed rulemaking on the use of credit ratings in the formulation of risk-based capital standards. The reality is that years of such rulemaking and interpretation by regulators will determine the true impact of the law.
More important to community banks, the FDIC announced the establishment of a department—the Division of Depositor and Consumer Protection (DCP) —that will soon become a household name for smaller insured state nonmember banks. This unit will be dedicated to the enforcement of consumer protection rules promulgated by the new Consumer Financial Protection Bureau (CFPB) as to banks exempt from that agency’s oversight.
The New Community Bank “Regulator”—FDIC’s DCP
On August 10, 2010, the FDIC Board created two new offices specifically for the purpose of implementing Dodd-Frank: the Office of Complex Financial Institutions (CFI) and Division of Depositor and Consumer Protection (DCP). The first will be the FDIC vehicle for carrying out the agency’s role in overseeing systemic and large bank holding company and non-bank financial firms. The DCP, on the other hand, is in a sense a community bank regulator. According to the FDIC, this body will be charged with enforcing consumer protection rules promulgated by the CFPB as against banks outside its purview: those with $10 billion or less in total assets. In the words of Chairman Bair:
Our depositor protection and compliance examination and enforcement responsibilities are integral to our unique responsibilities as deposit insurer and supervisor of thousands of community banks. The creation of this new division emphasizes the importance we place on these responsibilities and is directly responsive to Congress’s intent in the new legislation. DCP will also complement the activities of the new Consumer Financial Protection Bureau that is being established within the Federal Reserve. The FDIC supports the CFPB, and we are committed to doing our part in carrying out the consumer responsibilities Congress has entrusted to us.