July 21, 2011 marks the day the CFPB begins its supervision of very large banks with more than $10 billion in assets as well as any subsidiary and affiliate of such depository institutions to ensure compliance with federal consumer financial protection laws. Presently, there are 111 depository institutions that meet the $10 billion threshold level. The CFPB announced its bank supervision approach on July 12th and indicated that the process would initially begin remotely and would be followed by on-site reviews by CFPB examiners. The bureau will also place the initial phase of its Examination Manual on its website at www.ConsumerFinance.gov.


The CFPB has stated that its examiners will work out of satellite offices in Chicago, New York, San Francisco, and Washington, DC, and will focus on their specific regions of the country. These examiners—which currently include staff transferred from the Federal Deposit Insurance Corporation, Federal Reserve System, Office of the Comptroller of the Currency, and Office of Thrift Supervision, and are expected to expand to include examiners with state regulatory and industry experience—will undergo further training and are anticipated to spend most of their time on-site at these large banks and at other consumer financial service companies.

Supervisory Process

Section 1025(b) of the CFPA provides the CFPB with authority to require reports and conduct examinations of these large depository institutions. The CFPB has interpreted this provision to permit on-going supervision that will take the form of:

  • pre-examination scoping;
  • information review;
  • data analysis;
  • on-site exams;
  • regular communication with covered entities and prudential regulators; and
  • follow-up monitoring.

While most banks subject to the CFPB will undergo periodic examinations with advance notice, the CFPB has said that the largest and most complex banks will be subject to year-round supervision.

The CFPB has stated that the supervision process will be “constructive” to help ensure that risks posed to consumers are addressed. As outlined by the CFPB, these entities will undergo:

  • assessments of internal procedures to determine their ability to detect, prevent, and remedy harm to consumers;
  • reviews of compliance requirements during the life cycle of a consumer product or service;
  • fair lending reviews; and
  • policy and practice reviews for compliance with consumer financial protection laws.

If entities are found not to be compliant, the CFPB will seek corrective actions.