FORTH WORTH — It is “unlikely” large numbers of auto finance institutions will be examined in 2017, according to Calvin Hagins, the Consumer Financial Protection Bureau’s deputy assistant director for originations in the Office of Supervision Policy.
There is “no need to get animated” about who will be examined next year, Hagins told attendees at the Auto Finance Risk & Compliance Summit yesterday. The bureau has more than nine different program areas that the CFPB conducts supervision and only 500 examiners, he said. “There’s a whole lot more entities that do originations and servicing when it comes to mortgages that I know are subject to the larger participant rule,” therefore “it’s only possible to look at a handful.”
The CFPB published its larger participant rule last year, which allows the agency to supervise larger nonbank auto finance companies. The rule extended CFPB supervision to nonbank auto finance companies that make, acquire, or refinance 10,000 or more loans or leases in a year.
From a resource perspective, Hagins said, it makes more sense for the CFPB to examine a smaller number of entities that cover a larger percentage of the market. “When you have markets where it’s more gradual in terms of no real dominant players, you have to think about who and what type of entity poses the greatest risk” and whether the CFPB has the time and resources to develop its focus to be credible when conducting the exam, he added.
“Not everyone is going to be examined in 2017, ’18, or ’19,” Hagins said. “It’s hard to say how many, but it’s unlikely that it’s going to be large numbers of institutions that we can examine. It’s just strategically impossible to accomplish that when we have so many other pressing priorities at the bureau.”
