[Federal Register Volume 78, Number 187 (Thursday, September 26, 2013)]
[Rules and Regulations]
[Pages 59163-59165]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-23229]



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 Rules and Regulations
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  Federal Register / Vol. 78, No. 187 / Thursday, September 26, 2013 / 
Rules and Regulations  

[[Page 59163]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1081

[Docket No.: CFPB-2013-0030]
RIN 3170-AA29


Rules of Practice for Issuance of Temporary Cease-and-Desist 
Orders

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interim final rule with request for public comment.

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SUMMARY: The Dodd-Frank Wall Street Reform and Consumer Protection Act 
requires the Bureau of Consumer Financial Protection (Bureau) to 
prescribe rules establishing procedures for the conduct of adjudication 
proceedings. On June 29, 2012, the Bureau published the final Rules of 
Practice for Adjudication Proceedings. That final rule, however, does 
not apply to the issuance of a temporary cease-and-desist order (TCDO) 
pursuant to section 1053(c) of the Dodd-Frank Act. The Bureau now 
issues this interim final rule governing such issuance and seeks public 
comments.

DATES: This interim final rule takes effect on September 26, 2013. 
Comments must be received on or before November 25, 2013 to be assured 
of consideration.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2013-
0030 or Regulatory Information Number (RIN) 3170-AA29, by any of the 
following methods:
     Electronic: http://www.regulations.gov. Follow the 
instructions for submitting comments.
     Mail/Hand Delivery/Courier: Monica Jackson, Office of the 
Executive Secretary, Consumer Financial Protection Bureau, 1700 G 
Street NW., Washington, DC 20552.
    Instructions: All submissions must include the agency name and 
docket number or RIN for this rulemaking. In general, all comments 
received will be posted to http://www.regulations.gov. In addition, 
comments will be available for public inspection and copying at 1700 G 
Street NW., Washington, DC 20552, on official business days between the 
hours of 10 a.m. and 5 p.m. Eastern Time. An appointment to inspect 
comments can be made by telephoning (202) 435-7275. All comments, 
including attachments and other supporting materials, will become part 
of the public record and subject to public disclosure. Submit only 
information that you wish to make publicly available. Sensitive 
personal information, such as account numbers or Social Security 
numbers, should not be included. Comments will not be edited to remove 
any identifying or contact information such as name and address 
information, email addresses, or telephone numbers.

FOR FURTHER INFORMATION CONTACT: John R. Coleman, Senior Counsel, Legal 
Division, Consumer Financial Protection Bureau, 1700 G Street NW., 
Washington, DC 20552; at (202) 435-7254.

SUPPLEMENTARY INFORMATION: 

I. Background

    On June 29, 2012, the Bureau published in the Federal Register the 
final Rules of Practice for Adjudication Proceedings pursuant to 
sections 1022(b)(1) and 1053(e) of the Dodd-Frank Act, 12 U.S.C. 
5512(b)(1) & 5563(e).\1\ That final rule, however, does not apply to 
the issuance of a TCDO pursuant to section 1053(c) of the Dodd-Frank 
Act.\2\ The Bureau previously invited comments as to whether special 
rules governing such proceedings are necessary and, if so, what the 
rules should provide.\3\ One commenter recommended that the Bureau 
promulgate rules governing temporary cease-and-desist proceedings 
initiated pursuant to section 1053(c) of the Dodd-Frank Act and pointed 
to the Federal Deposit Insurance Corporation's (FDIC) rules governing 
temporary cease-and-desist proceedings, 12 CFR 308.131, as an example 
of such rules.\4\ The Bureau agrees that there should be specific rules 
governing the issuance of a temporary cease-and-desist order and now 
issues these interim final Rules of Practice for Issuance of Temporary 
Cease-and-Desist Orders (Rules), which govern the issuance of orders 
pursuant to section 1053(c) of the Dodd-Frank Act, 12 U.S.C. 
5563(c).\5\
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    \1\ See 77 FR 39058 (June 29, 2012) (codified at 12 CFR Part 
1081).
    \2\ Id. at 39058.
    \3\ See 76 FR 45338, 45338 (July 28, 2011).
    \4\ See 77 FR 39058, 39060 (June 29, 2012).
    \5\ Id.
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    In developing these Rules, the Bureau considered the procedures 
related to temporary cease-and-desist orders that are followed by other 
regulatory agencies, including the FDIC, the Securities and Exchange 
Commission (SEC), and the Office of the Comptroller of the Currency 
(OCC). The Rules most closely follow the FDIC's approach as codified in 
12 CFR 308.131. The Bureau issues these Rules to clarify (1) the basis 
for the issuance of a TCDO; (2) the content, scope, and form of a TCDO; 
(3) the procedures governing the issuance of a TCDO and the remedies 
available to the Bureau in issuing a TCDO; and (4) the rights of 
persons subject to a TCDO.

II. Section-by-Section Summary

Section 1081.100 Scope of the rules of practice

    This section is revised to clarify that the rules of practice 
described in this section are those contained in subparts A, B, C, and 
D. This section does not address the scope of subpart E, which is 
separately addressed in new Sec.  1081.500.
    This section is further revised to acknowledge that Sec.  
1081.200(d) permits commencement of a proceeding through a stipulation 
and consent order.

Section 1081.200 Commencement of proceeding and contents of notice of 
charges

    This section is revised to clarify that the section's stated 
requirements for commencing a proceeding apply to proceedings governed 
by subparts A, B, C, and D. The requirements for commencing a temporary 
cease-and-desist proceeding are set forth in new Sec.  1081.501.

Section 1081.500 Scope

    This section describes the scope of the Rules and makes clear that 
the issuance of a TCDO does not affect the underlying adjudication 
proceedings

[[Page 59164]]

instituted by the issuance of a notice of charges.

Section 1081.501 Basis for issuance, form, and service

    This section states the conditions under which the Bureau, through 
the Director or his or her designee, may issue a TCDO; a TCDO's 
required format and content; the proper method of service; and the 
general parameters of the kinds of activities a TCDO may prohibit or 
affirmatively require.

Section 1081.502 Judicial review, duration

    This section describes the process under which a TCDO respondent 
may seek judicial review of a TCDO, the sole process available for 
seeking review of a TCDO. This section clarifies the duration of a 
TCDO's effectiveness and the authority of the Director or his or her 
designee to terminate, limit, or suspend a TCDO.

III. Legal Authority

    The Bureau promulgates the Rules pursuant to its authority to 
implement section 1053 of the Dodd-Frank Act, 12 U.S.C. 5563(e), as 
well as its general rulemaking authority to promulgate rules necessary 
or appropriate to carry out the Federal consumer financial laws, 12 
U.S.C. 5512(b)(1).

IV. Section 1022(b) Provisions

    In developing the Rules, the Bureau has considered the potential 
benefits, costs, and impacts and has consulted or offered to consult 
with the prudential regulators, the Department of Housing and Urban 
Development, the Department of Justice, and the Federal Trade 
Commission, including with regard to consistency with any prudential, 
market, or systemic objectives administered by such agencies.\6\
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    \6\ Section 1022(b)(2)(A) of the Dodd-Frank Act calls for the 
Bureau to consider the potential benefits and costs of a regulation 
to consumers and covered persons, including the potential reduction 
of access by consumers to consumer financial products or services; 
the impact on depository institutions and credit unions with $10 
billion or less in total assets as described in section 1026 of the 
Dodd-Frank Act; and the impact on consumers in rural areas. Section 
1022(b)(2)(B) directs the Bureau to consult with the appropriate 
prudential regulators or other Federal agencies regarding 
consistency with objectives those agencies administer. The manner 
and extent to which these provisions apply to a rulemaking of this 
kind, which establishes Bureau procedures and imposes no standards 
of conduct, is unclear. Nevertheless, to inform this rulemaking more 
fully, the Bureau performed the analyses and consultations described 
in those provisions of the Dodd-Frank Act.
---------------------------------------------------------------------------

    The Dodd-Frank Act requires the Bureau to prescribe rules 
establishing such procedures as may be necessary to carry out section 
1053 of the Act, which provides for temporary cease-and-orders in 
subsection (c). The Rules themselves do not impose significant costs 
upon covered persons, but, consistent with section 1053, provide a 
straightforward and efficient process for the issuance of a temporary 
cease-and-desist order, and a direct route to judicial review.
    The Rules have no unique impact on insured depository institutions 
or insured credit unions with $10 billion or less in assets described 
in section 1026(a) of the Dodd-Frank Act, nor do they have a unique 
impact on rural consumers.

V. Regulatory Requirements

    The Rules relate solely to agency procedure and practice and, thus, 
are not subject to the notice and comment requirements of the 
Administrative Procedure Act, 5 U.S.C. 553(b). Although these Rules are 
exempt from these requirements, the Bureau invites comment on them.
    Because no notice of proposed rulemaking is required, these 
regulations are not a ``rule'' as defined by the Regulatory Flexibility 
Act, 5 U.S.C. 601(2). The Bureau has determined that the regulations in 
this subpart do not impose any new recordkeeping, reporting, or 
disclosure requirements on covered entities or members of the public 
that would constitute collections of information requiring approval 
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

List of Subjects in 12 CFR Part 1081

    Administrative practice and procedure, Banking, Banks, Consumer 
protection, Credit, Credit unions, Law enforcement, National banks, 
Savings associations, Trade practices.

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau amends Part 
1081 of Chapter X in Title 12 of the Code of Federal Regulations as 
follows:

PART 1081--RULES OF PRACTICE FOR ADJUDICATION PROCEEDINGS

0
1. The authority citation for part 1081 is revised to read as follows:

    Authority: 12 U.S.C. 5563(e); 12 U.S.C. 5512(b).

Subpart A--General Rules

0
2. Section 1081.100 is revised to read as follows:


Sec.  1081.100  Scope of the rules of practice.

    Subparts A, B, C, and D of this part prescribe rules of practice 
and procedure applicable to adjudication proceedings authorized by 
section 1053 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act of 2010 (Dodd-Frank Act) to ensure or enforce compliance 
with the provisions of Title X of the Dodd-Frank Act, rules prescribed 
by the Bureau under Title X of the Dodd-Frank Act, and any other 
Federal law or regulation that the Bureau is authorized to enforce. 
Except as otherwise provided in this part, the rules of practice 
contained in subparts A, B, C, and D of this part do not govern the 
conduct of Bureau investigations, investigational hearings or other 
proceedings that do not arise from proceedings after a notice of 
charges or a stipulation and consent order.

Subpart B--Initiation of Proceedings and Prehearing Rules

0
3. Section 1081.200 is amended by revising paragraph (a) to read as 
follows:


Sec.  1081.200  Commencement of proceeding and contents of notice and 
charges.

    (a) Commencement of proceeding. A proceeding governed by subparts 
A, B, C, and D of this part is commenced by filing of a notice of 
charges by the Bureau in accordance with Sec.  1081.111. The notice of 
charges must be served by the Bureau upon the respondent in accordance 
with Sec.  1081.113(d)(1).
* * * * *

0
4. Subpart E is added to read as follows:
Subpart E--Temporary Cease-and-Desist Proceedings
Sec.
1081.500 Scope.
1081.501 Basis for issuance, form, and service.
1081.502 Judicial review, duration.

Subpart E--Temporary Cease-and-Desist Proceedings


Sec.  1081.500  Scope.

    (a) This subpart prescribes the rules of practice and procedure 
applicable to the issuance of a temporary cease-and-desist order 
authorized by section 1053(c) of the Dodd-Frank Act (12 U.S.C. 
5563(c)).
    (b) The issuance of a temporary cease-and-desist order does not 
stay or otherwise affect the proceedings instituted by the issuance of 
a notice of charges, which are governed by subparts A, B, C, and D of 
this part.


Sec.  1081.501  Basis for issuance, form, and service.

    (a) In general. The Director or his or her designee may issue a 
temporary cease-and-desist order if he or she determines that one or 
more of the alleged violations specified in a notice of charges, or the 
continuation thereof,

[[Page 59165]]

is likely to cause the respondent to be insolvent or otherwise 
prejudice the interests of consumers before the completion of the 
adjudication proceeding. A temporary cease-and-desist order may require 
the respondent to cease and desist from any violation or practice 
specified in the notice of charges and to take affirmative action to 
prevent or remedy such insolvency or other condition pending completion 
of the proceedings initiated by the issuance of a notice of charges.
    (b) Incomplete or inaccurate records. When a notice of charges 
specifies, on the basis of particular facts and circumstances, that the 
books and records of a respondent are so incomplete or inaccurate that 
the Bureau is unable to determine the financial condition of the 
respondent or the details or purpose of any transaction or transactions 
that may have a material effect on the financial condition of the 
respondent, then the Director or his or her designee may issue a 
temporary order requiring:
    (1) The cessation of any activity or practice which gave rise, 
whether in whole or in part, to the incomplete or inaccurate state of 
the books or records; or
    (2) Affirmative action to restore such books or records to a 
complete and accurate state, until the completion of the adjudication 
proceeding.
    (c) Content, scope and form of order. Every temporary cease-and-
desist order accompanying a notice of charges shall describe:
    (1) The basis for its issuance, including the alleged violations 
and the harm that is likely to result without the issuance of an order; 
and
    (2) The act or acts the respondent is to take or refrain from 
taking.
    (d) Effective and enforceable upon service. A temporary cease-and-
desist order is effective and enforceable upon service.
    (e) Service. Service of a temporary cease-and-desist order shall be 
made pursuant to Sec.  1081.113(d).


Sec.  1081.502  Judicial review, duration.

    (a) Availability of judicial review. Judicial review of a temporary 
cease-and-desist order shall be available solely as provided in section 
1053(c)(2) of the Dodd-Frank Act (12 U.S.C. 5563(c)(2)). Any respondent 
seeking judicial review of a temporary cease-and-desist order issued 
under this subpart must, not later than ten calendar days after service 
of the temporary cease-and-desist order, apply to the United States 
district court for the judicial district in which the residence or 
principal office or place of business of the respondent is located, or 
the United States District Court for the District of Columbia, for an 
injunction setting aside, limiting, or suspending the enforcement, 
operation, or effectiveness of such order.
    (b) Duration. Unless set aside, limited, or suspended by the 
Director or his or her designee, or by a court in proceedings 
authorized under section 1053(c)(2) of the Dodd-Frank Act (12 U.S.C. 
5563(c)(2)), a temporary cease-and-desist order shall remain effective 
and enforceable until:
    (1) The effective date of a final order issued upon the conclusion 
of the adjudication proceeding;
    (2) With respect to a temporary cease-and-desist order issued 
pursuant to Sec.  1081.501(b) only, the Bureau determines by 
examination or otherwise that the books and records are accurate and 
reflect the financial condition of the respondent, and the Director or 
his or her designee issues an order terminating, limiting, or 
suspending the temporary cease-and-desist order.

    Dated: September 10, 2013.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2013-23229 Filed 9-25-13; 8:45 am]
BILLING CODE 4810-AM-P