[Federal Register Volume 87, Number 83 (Friday, April 29, 2022)]
[Rules and Regulations]
[Pages 25397-25398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-09107]



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 Rules and Regulations
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  Federal Register / Vol. 87, No. 83 / Friday, April 29, 2022 / Rules 
and Regulations  

[[Page 25397]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1091

[Docket No. CFPB-2022-0024]


Supervisory Authority Over Certain Nonbank Covered Persons Based 
on Risk Determination; Public Release of Decisions and Orders

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Procedural rule; request for public comment.

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SUMMARY: The Consumer Financial Protection Bureau (Bureau) is amending 
an aspect of procedures for establishing supervisory authority based on 
a risk determination. Specifically, the Bureau is adding a mechanism 
for the Bureau to make final decisions and orders in these proceedings 
public. The Bureau welcomes comments on this rule, and the Bureau may 
make further amendments if it receives comments warranting changes.

DATES: This procedural rule is effective on April 29, 2022. Comments 
must be received on or before May 31, 2022.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2022-
0024, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include 
Docket No. CFPB-2022-0024 in the subject line of the message.
     Mail/Hand Delivery/Courier: Comment Intake--Supervisory 
Authority Over Certain Nonbank Covered Persons Based on Risk 
Determination; Public Release of Decisions and Orders, Consumer 
Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.
    Instructions: The Bureau encourages the early submission of 
comments. All submissions should include the agency name and docket 
number for this rulemaking. Because paper mail in the Washington, DC 
area and at the Bureau is subject to delay, and in light of 
difficulties associated with mail and hand deliveries during the COVID-
19 pandemic, commenters are encouraged to submit comments 
electronically. In general, all comments received will be posted 
without change to https://www.regulations.gov. In addition, once the 
Bureau's headquarters reopens, 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. At that time, you can make an appointment to inspect the 
documents 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. 
Proprietary information or sensitive personal information, such as 
account numbers or Social Security numbers, or names of other 
individuals, should not be included. Comments will not be edited to 
remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Christopher Shelton, Senior Counsel, 
Legal Division, at 202-435-7700. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Discussion

    Among other sources of supervisory authority, the Bureau can 
supervise a nonbank covered person that the Bureau ``has reasonable 
cause to determine, by order, after notice to the covered person and a 
reasonable opportunity for such covered person to respond . . . is 
engaging, or has engaged, in conduct that poses risks to consumers with 
regard to the offering or provision of consumer financial products or 
services.'' \1\ The Bureau issued a procedural rule in 2013 to govern 
these proceedings.\2\ Section 1091.115(c) of the existing rule 
provides, in summary, that documents, records or other items in 
connection with a proceeding under part 1091 shall be deemed 
confidential supervisory information.
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    \1\ 12 U.S.C. 5514(a)(1)(C). The Bureau must base such 
reasonable-cause determinations on complaints collected by the 
Bureau under 12 U.S.C. 5493(b)(3), or on information collected from 
other sources. Id.
    \2\ 78 FR 40351 (July 3, 2013); see also 85 FR 75194 (Nov. 24, 
2020) (updating certain cross-references to 12 CFR part 1070).
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    The Bureau is now adding a new Sec.  1091.115(c)(2), which provides 
an exception regarding final decisions and orders by the Director. A 
central principle of the supervisory process is confidentiality. At the 
same time, these decisions and orders present unique considerations 
compared to other supervisory activity. There is a public interest in 
transparency when it comes to these potentially significant rulings by 
the Director as head of the agency. Also, if a decision or order is 
publicly released, it would be available as a precedent in future 
proceedings. Accordingly, the Bureau believes that there should be a 
procedural mechanism to determine whether all or part of a decision or 
order should be publicly released. The process established in Sec.  
1091.115(c)(2) is a straightforward one. In summary, within seven days 
of service of the decision or order, the respondent has the option of 
filing a submission on this issue, and then the Director will determine 
whether the decision or order will be released on the Bureau's website, 
in whole or in part.\3\
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    \3\ The Bureau also notes three features of this provision. 
First, the computation of ``days'' is governed by existing Sec.  
1091.114. Second, the Director's authority regarding public release 
could be delegated to a designee of the Director under existing 
Sec.  1091.101. Third, the Bureau is not extending the staff 
separation-of-functions requirement in Sec.  1091.109(c), which 
applies to the Director's final decision and order, to the 
Director's subsequent determination regarding public release. Doing 
so would not be required by law, and the routine determination of 
whether to post material on the Bureau's website is not sufficiently 
significant to warrant doing so.
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    In this rule, the Bureau is not endeavoring to codify a standard on 
the issue of public release. However, the Bureau generally anticipates 
applying Exemptions 4 and 6 of the Freedom of Information Act to 
information submitted by respondents that is reflected in final 
decisions and orders.\4\ Exemption 4 applies to ``trade secrets and 
commercial or financial information obtained from a person and 
privileged or confidential,'' while Exemption 6 applies to ``personnel 
and medical files and similar files the disclosure of which would 
constitute a clearly unwarranted

[[Page 25398]]

invasion of personal privacy.'' \5\ The Bureau would also consider 
whether there are other reasons to not publicly release a final 
decision or order, in whole or in part. The Bureau welcomes any 
comments on whether it should amend the rule to codify a standard for 
determinations regarding public release.
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    \4\ 5 U.S.C. 552(b)(4), (b)(6).
    \5\ Id.
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    The Bureau notes that this rule will have limited effects on the 
public. Nonbank covered persons that are respondents may incur 
incidental costs, if they choose to prepare submissions on the issue of 
public release. The rule itself will not trigger public release of 
decisions and orders, since it simply establishes a procedure to 
consider that issue. If the Bureau does ultimately decide to release a 
decision or order, that should generally benefit covered persons, 
consumers, and other members of the public by giving them a better 
understanding of the Bureau's decisionmaking.
    In formulating this rule, the Bureau has consulted or offered to 
consult with the prudential regulators and the Federal Trade 
Commission.

II. Regulatory Requirements

    As a rule of agency organization, procedure, or practice, this rule 
is exempt from the notice-and-comment rulemaking requirements of the 
Administrative Procedure Act.\6\
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    \6\ 5 U.S.C. 553(b).
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    Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis.\7\ Moreover, the Bureau's Director 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities. Therefore, an analysis is also 
not required for that reason.\8\ As a result of the rule, respondents 
in the relevant proceedings may choose to make submissions on the issue 
of public release. Some of these respondents may be small entities 
under the Regulatory Flexibility Act, but they would represent a very 
small fraction of small entities in consumer financial services 
markets. Accordingly, the number of small entities affected is not 
substantial.
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    \7\ 5 U.S.C. 603, 604.
    \8\ 5 U.S.C. 605(b).
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    The Bureau has also determined that this rule does not impose any 
new or revise any existing recordkeeping, reporting, or disclosure 
requirements on covered entities or members of the public that would be 
collections of information requiring approval by the Office of 
Management and Budget under the Paperwork Reduction Act.\9\
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    \9\ 44 U.S.C. 3501-3521.
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List of Subjects in 12 CFR Part 1091

    Administrative practice and procedure, Consumer protection, Credit, 
Trade practices.

Authority and Issuance

    For the reasons set forth above, the Bureau amends 12 CFR part 1091 
as set forth below:

PART 1091--PROCEDURAL RULE TO ESTABLISH SUPERVISORY AUTHORITY OVER 
CERTAIN NONBANK COVERED PERSONS BASED ON RISK DETERMINATION

0
1. The authority citation for part 1091 continues to read as follows:

    Authority: 12 U.S.C. 5512(b)(1), 5514(a)(1)(C), 5514(b)(7).


0
2. In Sec.  1091.115, add headings to paragraphs (a) and (b) and revise 
paragraph (c) to read as follows:


Sec.  1091.115  Change of time limits and confidentiality of 
proceedings.

    (a) Change of time limits. * * *
    (b) No substantive rights. * * *
    (c) Confidentiality--(1) General rule. In connection with a 
proceeding under this part, including a petition for termination under 
Sec.  1091.113, all documents, records or other items submitted by a 
respondent to the Bureau, all documents prepared by, or on behalf of, 
or for the use of the Bureau, and any communications between the Bureau 
and a person, shall be deemed confidential supervisory information 
under 12 CFR 1070.2(i)(1). However, this paragraph does not apply to 
the version of a document that is released on the Bureau's website 
under paragraph (c)(2).
    (2) Publication of final decisions and orders by the Director. The 
Director will make a determination regarding whether a decision or 
order under Sec.  1091.103(b)(2), Sec.  1091.109(a), or Sec.  
1091.113(e) will be publicly released on the Bureau's website, in whole 
or in part. The respondent may file a submission regarding that issue, 
within seven days after service of the decision or order. The Director 
may also decide that the Director's determination regarding public 
release will itself be released on the website, in whole or in part. 
Section 1091.109(c) is not applicable to determinations under this 
paragraph.

Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2022-09107 Filed 4-28-22; 8:45 am]
BILLING CODE 4810-AM-P