Statement of Policy on Applications for Early Termination of Consent Orders, 69482-69485 [2020-22360]

Download as PDF 69482 Federal Register / Vol. 85, No. 213 / Tuesday, November 3, 2020 / Rules and Regulations Title 8—Aliens and Nationality §§ 1003.1(e)(8)(ii) and 1292.18 and may not delegate any other authority to adjudicate cases arising under the Act or regulations unless expressly authorized to do so. (c) Limit on the authority of the Director. Except as provided by statute, regulation, or delegation of authority from the Attorney General, or when acting as a designee of the Attorney General, the Director shall have no authority to adjudicate cases arising under the Act or regulations or to direct the result of an adjudication assigned to the Board, an immigration judge, the Chief Administrative Hearing Officer, or an Administrative Law Judge. When acting under authority described in this paragraph (c), the Director shall exercise independent judgment and discretion in considering and determining the cases and may take any action consistent with the Director’s authority as is appropriate and necessary for the disposition of the case. Nothing in this part, however, shall be construed to limit the authority of the Director under paragraph (a) or (b) of this section. * * * * * PART 1003—EXECUTIVE OFFICE FOR IMMIGRATION REVIEW PART 1292—REPRESENTATION AND APPEARANCES 8 CFR Part 1003 Administrative practice and procedure, Aliens, Immigration, Legal services, Organization and functions (Government agencies). 8 CFR Part 1292 Administrative practice and procedure, Immigration, Lawyers, Reporting and recordkeeping requirements. 28 CFR Part 0 Authority delegations (Government agencies), Government employees, Organization and functions (Government agencies), Privacy, Reporting and recordkeeping requirements, Whistleblowing. Accordingly, for the reasons set forth in the preamble, the interim final rule amending parts 1001, 1003, and 1292 of title 8 of the Code of Federal Regulations and part 0 of title 28 of the Code of Federal Regulations, published August 26, 2019, at 84 FR 44537, is adopted as final with the following changes: 1. The authority citation for part 1003 continues to read as follows: ■ Authority: 5 U.S.C. 301; 6 U.S.C. 521; 8 U.S.C. 1101, 1103, 1154, 1155, 1158, 1182, 1226, 1229, 1229a, 1229b, 1229c, 1231, 1254a, 1255, 1324d, 1330, 1361, 1362; 28 U.S.C. 509, 510, 1746; sec. 2 Reorg. Plan No. 2 of 1950; 3 CFR, 1949–1953 Comp., p. 1002; section 203 of Pub. L. 105–100, 111 Stat. 2196–200; sections 1506 and 1510 of Pub. L. 106–386, 114 Stat. 1527–29, 1531–32; section 1505 of Pub. L. 106–554, 114 Stat. 2763A– 326 to –328. 2. Section 1003.0 is amended by revising paragraphs (b)(2) and (c) to read as follows: ■ § 1003.0 Review. Executive Office for Immigration khammond on DSKJM1Z7X2PROD with RULES * * * * * (b) * * * (1) * * * (2) Delegations. (i) Except as provided in paragraph (b)(2)(ii) of this section, the Director may delegate the authority given to him by this part or otherwise by the Attorney General to the Deputy Director, the Chairman of the Board of Immigration Appeals, the Chief Immigration Judge, the Chief Administrative Hearing Officer, the Assistant Director for Policy, the General Counsel, or any other EOIR employee. (ii) The Director may not delegate the authority assigned to the Director in VerDate Sep<11>2014 15:54 Nov 02, 2020 Jkt 253001 3. The authority citation for part 1292 continues to read as follows: ■ Authority: 8 U.S.C. 1103, 1362. 4. Section 1292.6 is amended by revising the last sentence to read as follows: ■ § 1292.6 Interpretation. * * * Interpretations of §§ 1292.11 through 1292.20 will be made by the Assistant Director for Policy (or the Assistant Director for Policy’s delegate) or the Director. § 1292.18 [Amended] 5. Section 1292.18 is amended in paragraph (a) introductory text by removing the last sentence. ■ Dated: October 13, 2020. William P. Barr, Attorney General. ACTION: Policy statement. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) provides that the Bureau of Consumer Financial Protection (Bureau) may enter into administrative consent orders (Consent Orders) where the Bureau has identified violations of Federal consumer financial law. The Bureau recognizes that there may be exceptional circumstances where it is appropriate to terminate a Consent Order before its original expiration date. To facilitate such early terminations where appropriate, this policy statement sets forth a process by which an entity subject to a Consent Order may apply for early termination and articulates the standards that the Bureau intends to use when evaluating early termination applications. DATES: This policy statement is applicable on October 8, 2020. FOR FURTHER INFORMATION CONTACT: Mehul Madia, Division of Supervision, Enforcement, and Fair Lending, at (202) 435–7104. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@ cfpb.gov. SUPPLEMENTARY INFORMATION: SUMMARY: I. Background Where the Bureau has found that an entity has violated Federal consumer financial law, the Dodd-Frank Act provides that the Bureau may settle its claims against that entity by entering into an administrative Consent Order.1 Consent Orders describe the Bureau’s findings and conclusions concerning the identified violations and generally impose injunctive relief, monetary relief such as redress and civil money penalties, and reporting, recordkeeping, and cooperation requirements.2 Consent Orders are negotiated by the Bureau and the entity (or entities) subject to them and generally have a five-year term, although in some instances the Bureau may impose a longer term when, in its view, the circumstances warrant it. Bureau staff monitor whether entities subject to Consent Orders are complying [FR Doc. 2020–23210 Filed 11–2–20; 8:45 am] BILLING CODE 4410–30–P BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Chapter X Statement of Policy on Applications for Early Termination of Consent Orders Bureau of Consumer Financial Protection. AGENCY: PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 1 See 12 U.S.C. 5563; see also 12 CFR 1081.120(d). The Bureau may also enter into settlements that are filed in Federal court and must be approved by the court. See 12 U.S.C. 5564(c). The Bureau may enter into settlements with any ‘‘person,’’ which includes both individuals (i.e., natural persons) and various kinds of entities. See 12 U.S.C. 5481(19). As discussed further below, this policy applies to entities subject to Consent Orders, and not to individuals. This policy therefore generally refers to ‘‘entities’’ when discussing Bureau Consent Orders. 2 See 12 U.S.C. 5565; see also Consumer Financial Protection Bureau, Enforcement Actions, https:// www.consumerfinance.gov/policy-compliance/ enforcement/actions/. E:\FR\FM\03NOR1.SGM 03NOR1 Federal Register / Vol. 85, No. 213 / Tuesday, November 3, 2020 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES with the terms of those orders, and when appropriate the Bureau takes action against those who fail to comply with a Consent Order.3 Consent Orders play an essential role in the Bureau’s enforcement work by providing a public, enforceable mechanism to provide relief for consumers and to deter future violations, and the Bureau believes that in most instances Consent Orders should run for their full negotiated terms. At the same time, the Bureau recognizes that Consent Orders can impose burdens on the entities subject to them. For example, the reporting and record-keeping requirements imposed by Consent Orders can be costly and resource-intensive. In addition, in some circumstances, the existence of an open Bureau Consent Order can impact whether a depository institution supervised by a prudential regulator is permitted to open new branches or to merge with or acquire other financial institutions—which can burden the institution and potentially limit the choices available to consumers. Monitoring Consent Orders can also pose a burden for the Bureau itself. The Bureau believes there may be exceptional circumstances when early termination of a Consent Order against an entity is appropriate and can be accomplished in a manner that minimizes the risk of new violations of law or harm to consumers. To facilitate such early terminations, this policy statement sets forth a process by which an entity subject to a Consent Order may apply for early termination and articulates the standards that the Bureau intends to use when evaluating early termination applications. Under this policy, which is not binding on the Bureau, the Bureau’s Director intends to retain complete discretion and sole authority to terminate Consent Orders. In addition to reducing the burdens associated with Consent Orders when they are no longer necessary, this policy provides entities with an incentive to fully and promptly comply with Bureau Consent Orders and to improve their compliance management systems to avoid additional violations. This policy also provides guidance to those subject to Bureau Consent Orders regarding the 3 The Bureau may seek to enforce compliance with Consent Orders administratively or in court. See, e.g., 12 U.S.C. 5563(a), (b), (c), (d), 5564(a). In addition to being a violation of the Consent Order itself, a failure to comply with the terms of a Consent Order is a violation of the Dodd-Frank Act. See 12 U.S.C. 5536(a)(1)(A) (making it unlawful for a covered person or service provider to ‘‘commit any act or omission in violation of a Federal consumer financial law’’); 12 U.S.C. 5481(14) (defining ‘‘Federal consumer financial law’’ to include an ‘‘order prescribed by the Bureau’’). VerDate Sep<11>2014 15:54 Nov 02, 2020 Jkt 253001 circumstances in which the Bureau may grant applications for early termination of a Consent Order. II. Policy on Applications for Early Termination of Consent Orders A. Conditions for Granting Early Termination The Bureau intends to grant applications for early termination of Consent Orders if it determines, in its sole discretion, that: • The entity meets all of the eligibility criteria set forth below; • The entity has complied with the terms and conditions of the Consent Order; and • The entity’s compliance position is ‘‘satisfactory’’ in the institutional product line (IPL) or compliance area (e.g., fair lending) for which the Order was issued. When an entity applies for termination, its application should demonstrate that these conditions are satisfied. 1. Eligibility To Apply for Early Termination In order to protect consumers from unwarranted early terminations and preserve the resources of potential applicants and the Bureau, the Bureau only intends to consider applications for early termination under this policy from entities that meet certain threshold eligibility criteria. First, the entity must be subject to a Consent Order the Bureau issued using its authority to conduct administrative adjudication proceedings.4 This policy does not apply to settlements approved and ordered by a court, which can only be terminated early by court order. In general, the Bureau does not believe it is an appropriate use of its resources to seek to alter the status of settlements entered by courts. This policy also does not apply to court orders entered as a result of litigation (e.g., after trial or summary judgment), which similarly can only be lifted by a court. Second, only entities are eligible to apply for early termination under this policy.5 Individuals (i.e., natural persons) are not eligible. As described further below, the Bureau only intends to grant early termination where, among other things, an entity demonstrates that its compliance management system is ‘‘satisfactory’’ in the institutional product line in which the Consent Order was issued. The Bureau believes it would be impractical to undertake a 4 See 12 U.S.C. 5563; 12 CFR 1081.120(d). purposes of this policy, an entity is any ‘‘person’’ under 12 U.S.C. 5481(19) other than an individual. 5 For PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 69483 comparable review of whether individuals are likely to comply with the law in the future. Third, entities may not apply for early termination under this policy within the first year after the entry of the Consent Order, or until at least six months after all compliance and redress plans required under the Consent Order have been fully implemented, whichever is later. This eligibility requirement is intended to discourage premature applications for termination of Consent Orders and to preserve Bureau resources. Fourth, entities are not eligible for early termination under this policy when the Consent Order imposes a ban on participating in a certain industry (e.g., the mortgage industry or debtrelief industry), when the Consent Order at issue involves violations of an earlier Bureau Order, or when there has been any criminal action related to the violations found in the Consent Order.6 In each of these situations, the Bureau believes that the risk of future violations and harm to consumers is heightened and that considering applications for early termination of a Consent Order would not be a productive use of Bureau resources. Finally, absent extraordinary circumstances, the Bureau does not intend to consider more than one request from an entity for termination of the same Consent Order. This eligibility requirement is intended to incentivize entities to submit complete applications at an appropriate time following the issuance of a Consent Order, and to discourage serial requests that could pose a resource challenge for the Bureau. 2. Compliance With the Consent Order When an entity applies for early termination, its application should demonstrate its full compliance with the Consent Order, including whether the entity has, when required, corrected violations of Federal consumer financial law; paid redress, civil money penalties, or other monetary relief; adopted appropriate policies and procedures to ensure future compliance; submitted adequate reports; and maintained required records. The entity’s application may reference or attach prior submissions to the Bureau relevant to demonstrating its compliance with 6 For purposes of this policy, a related criminal action is any Federal, State, or local criminal action involving the conduct described in the Consent Order in which the entity or any of its affiliates, officers, employees, or agents have been named as a defendant or as an unindicted co-conspirator, regardless of whether there has been a conviction in the action. E:\FR\FM\03NOR1.SGM 03NOR1 69484 Federal Register / Vol. 85, No. 213 / Tuesday, November 3, 2020 / Rules and Regulations the Consent Order as appropriate. Additionally, if applicable, the entity’s application should reference the results of any supervisory work conducted by the Bureau to assess the entity’s Consent Order compliance and provide any additional information relevant to assessing its compliance with the Consent Order. Where appropriate, the Bureau will work with the entity to ensure that the entity has provided adequate documentation to demonstrate compliance. If it has not already done so, the Bureau intends to expeditiously review the entity’s compliance with the Consent Order and conduct follow-up work as needed to determine the entity’s compliance. The Bureau generally intends to complete this compliance review within six months of receiving an application that the Bureau determines is complete, although the Bureau retains discretion over when to conduct the review to determine compliance with Consent Order provisions given the Bureau’s other supervisory and enforcement priorities. 3. Satisfactory Compliance System for the IPL or Compliance Area khammond on DSKJM1Z7X2PROD with RULES In the application for early termination of the Consent Order, the entity shall also demonstrate that its compliance management system for the IPL or compliance area at issue under the Order is ‘‘satisfactory,’’ or the equivalent of a ‘‘2’’ rating under the Uniform Interagency Consumer Compliance Rating System. Under that rating system, a 2 rating signifies that the entity ‘‘maintains a [compliance management system] that is satisfactory at managing consumer compliance risk in the institution’s products and services and at substantially limiting violations of law and consumer harm.’’ As part of its application to the Bureau for early termination, an entity should submit evidence that it has satisfied these elements. If applicable, the entity should reference prior supervisory conclusions from a Bureau examination regarding the entity’s compliance management system for the IPL or compliance area at issue.7 In addition, if applicable, the entity should identify any supervisory rating or conclusion regarding its compliance management system in the relevant IPL or 7 If, during the pendency of the Consent Order, Bureau supervisory staff have already concluded through supervisory work that the entity’s compliance management system for the IPL or compliance area at issue is satisfactory or better, the entity may reference that exam and that supervisory conclusion in this portion of its application and need not provide additional documentation regarding its compliance management system. VerDate Sep<11>2014 15:54 Nov 02, 2020 Jkt 253001 compliance area that it has received from other State or Federal regulators during the pendency of the Consent Order. The entity should also provide the Bureau with any additional documentation or information that the Bureau considers necessary to determine whether the entity maintains a satisfactory compliance management system in the subject IPL.8 The Bureau believes that requiring an entity to satisfy this condition should help ensure that the entity’s compliance position is sustainable after the Consent Order is terminated. B. Process for Submission and Review of Early Termination Applications Unless otherwise directed in writing by the Bureau, an entity’s termination application should be submitted to the Bureau point of contact identified in the ‘‘Notices’’ section of the Consent Order. Prior to submitting an application for order termination, an entity should contact the Bureau point of contact established in the Consent Order for additional guidance on the form of such a request.9 In general, the entity’s application should demonstrate that the entity has satisfied all of the conditions set forth above. The application may include exhibits and may reference prior written submissions to the Bureau as appropriate. Any factual assertions an entity makes in its application should be made under oath (such as in a sworn affidavit) by someone with personal knowledge of such facts. Bureau staff intend to review the application and any supporting documentation when considering whether to recommend that the Director grant an application to terminate a Consent Order. As noted above, the Bureau may request additional information from the entity when evaluating the application. The Bureau may also consider any other information available to it regarding the entity, including information obtained from other government agencies or through other supervisory and enforcement activities involving the entity. Under this policy, Bureau staff intend to make recommendations to the Bureau’s Director regarding whether to grant applications for early termination. 8 When evaluating applications, the Bureau does not intend to assign a numerical compliance rating under the Consumer Compliance Rating System to the entity that has applied for early termination. The Bureau assigns such ratings in the normal course of its supervisory process, and it intends to continue to do so in the context of scheduled examinations of consent order compliance. 9 Any other questions regarding submission of an application for early termination should also be directed to the designated point of contact for the Consent Order. PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 The Bureau’s Director intends to retain complete discretion and sole authority to terminate Consent Orders. The Director’s orders granting or denying termination applications will be posted on the Bureau’s online administrative docket 10 and distributed to the entity. Prior to the Director’s decision, an entity may withdraw its application at any time.11 III. Regulatory Requirements This Policy Statement constitutes a general statement of policy that is exempt from the notice and comment rulemaking requirements of the Administrative Procedure Act.12 It is intended to provide information regarding the Bureau’s general plans to exercise its discretion and does not impose any legal requirements on external parties, nor does it create or confer any substantive rights on external parties that could be enforceable in any administrative or civil proceeding. Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. The Bureau has also determined that this Policy Statement 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. Pursuant to the Congressional Review Act, 5 U.S.C. 801 et seq., the Bureau will submit a report containing this policy statement and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the United States prior to its applicability date. The Office of Information and Regulatory Affairs has designated this Policy Statement as not a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). IV. Signing Authority The Director of the Bureau, having reviewed and approved this document, 10 See https://www.consumerfinance.gov/ administrative-adjudication-proceedings/ administrative-adjudication-docket/. 11 Prior to the Director’s decision, Bureau staff may inform the entity if staff intend to recommend denying an application for early termination. If an entity withdraws its application, the Bureau would still consider the application to constitute the entity’s one application for early termination for purposes of the eligibility criteria set forth in section II.A.1. 12 5 U.S.C. 553(b). However, this is not a ‘‘statement of policy’’ as that term is specifically used in Regulation X, 12 CFR 1024.4(a)(1)(ii). E:\FR\FM\03NOR1.SGM 03NOR1 Federal Register / Vol. 85, No. 213 / Tuesday, November 3, 2020 / Rules and Regulations is delegating the authority to electronically sign this document to Laura Galban, a Bureau Federal Register Liaison, for purposes of publication in the Federal Register. Dated: October 5, 2020. Laura Galban, Federal Register Liaison, Bureau of Consumer Financial Protection. [FR Doc. 2020–22360 Filed 11–2–20; 8:45 am] BILLING CODE 4810–AM–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2020–0921; Project Identifier AD–2020–00323–R; Amendment 39–21303; AD 2020–22–07] RIN 2120–AA64 Airworthiness Directives; Bell Textron Inc. (Type Certificate Previously Held by Bell Helicopter Textron Inc.) Helicopters Federal Aviation Administration (FAA), DOT. ACTION: Final rule; request for comments. AGENCY: The FAA is adopting a new airworthiness directive (AD) for all Bell Textron Inc. (Type Certificate previously held by Bell Helicopter Textron Inc.) Model 412, 412CF, and 412EP helicopters. This AD requires revising the existing Rotorcraft Flight Manual (RFM) for your helicopter. This AD was prompted by an accident and multiple reports of a cracked main gearbox (MGB) support case. The FAA is issuing this AD to address the unsafe condition on these products. DATES: This AD is effective November 18, 2020. The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of November 18, 2020. The FAA must receive comments on this AD by December 18, 2020. ADDRESSES: You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods: • Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments. • Fax: 202–493–2251. • Mail: U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. khammond on DSKJM1Z7X2PROD with RULES SUMMARY: VerDate Sep<11>2014 15:54 Nov 02, 2020 Jkt 253001 • Hand Delivery: U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. For service information identified in this final rule, contact Bell Textron, Inc., P.O. Box 482, Fort Worth, TX 76101; telephone 817–280–3391; fax 817–280– 6466; or at https:// www.bellcustomer.com. You may view this service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N–321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call 817–222–5110. It is also available on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2020– 0921. Examining the AD Docket You may examine the AD docket on the internet at https:// www.regulations.gov by searching for and locating Docket No. FAA–2020– 0921; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this final rule, any service information that is incorporated by reference, any comments received, and other information. The street address for the Docket Operations is listed above. Comments will be available in the AD docket shortly after receipt. FOR FURTHER INFORMATION CONTACT: Kuethe Harmon, Safety Management Program Manager, DSCO Branch, Compliance & Airworthiness Division, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone 817–2225198; email kuethe.harmon@faa.gov. SUPPLEMENTARY INFORMATION: Discussion The FAA is adopting a new AD for Bell Textron Inc. Model 412, 412CF, and 412EP helicopters. This AD was prompted by an accident on a Model 412EP helicopter and multiple reports of a cracked MGB support case. Initial investigations showed that excessive pylon pitch vibrations likely caused overload that resulted in these failures, and investigations are ongoing to determine the root cause of these vibrations. However, field experience and flight test data indicate that excessive degradation of the transmission mounts and friction dampers could cause the sudden increase in one-per-rev vertical PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 69485 vibration, and minimum collective and cyclic controls friction not meeting the maintenance manual specifications may also be a contributing factor. This condition, if not addressed, could result in structural failure of the MGB support case and subsequent reduced control of the helicopter. To address this unsafe condition, this AD requires revising Section 2, Normal Procedures, under both ‘‘BEFORE TAKEOFF’’ and ‘‘IN–FLIGHT OPERATION(S)’’ of the existing RFM for your helicopter. Related Service Information Under 1 CFR Part 51 The FAA reviewed Section 2— Normal Procedures, of Bell 412 BHT– 412–FM–1 RFM, Revision 26; Bell 412 BHT–412–FM–2 RFM, Revision 13; Bell 412 BHT–412–FM–3 RFM, Revision 20; Bell 412EP BHT–412–FM–4 RFM, Revision 37; Bell 412EPI BHT–412–FM– 5 RFM, Revision 9; and Subaru Bell 412EPX BHT–412–FM–6 RFM, Revision 5, each dated August 19, 2020. These RFM revisions add a caution under ‘‘BEFORE TAKEOFF’’ and ‘‘IN–FLIGHT OPERATION(S)’’ to the existing RFM for your helicopter. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section. Other Related Service Information The FAA also reviewed Bell Operation Safety Notice 412–18–43, dated December 19, 2018 (OSN), which notified Model 412 and 412EP helicopter owners and operators of reports regarding rapid buildup of oneper-rev vertical vibration associated with a large steady state forward cyclic displacement in combination with collective input while at 100/103 percent revolutions per minute (RPM) with any part of the skid gear in contact with the ground. The OSN also noted that this vibration mode can be encountered on all Bell Model 412 helicopters equipped with any type of landing gear. Finally, the OSN reminded operators that, should this vibration mode be experienced, the amount of forward cyclic input shall immediately be reduced and, if necessary, the collective and rotor RPM shall also be reduced to exit the vibration mode described. FAA’s Determination The FAA is issuing this AD after evaluating all of the relevant information and determining the unsafe condition described previously is likely E:\FR\FM\03NOR1.SGM 03NOR1

Agencies

BUREAU OF CONSUMER FINANCIAL PROTECTION

[Federal Register Volume 85, Number 213 (Tuesday, November 3, 2020)]
[Rules and Regulations]
[Pages 69482-69485]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22360]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Chapter X


Statement of Policy on Applications for Early Termination of 
Consent Orders

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Policy statement.

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SUMMARY: The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act) provides that the Bureau of Consumer Financial 
Protection (Bureau) may enter into administrative consent orders 
(Consent Orders) where the Bureau has identified violations of Federal 
consumer financial law. The Bureau recognizes that there may be 
exceptional circumstances where it is appropriate to terminate a 
Consent Order before its original expiration date. To facilitate such 
early terminations where appropriate, this policy statement sets forth 
a process by which an entity subject to a Consent Order may apply for 
early termination and articulates the standards that the Bureau intends 
to use when evaluating early termination applications.

DATES: This policy statement is applicable on October 8, 2020.

FOR FURTHER INFORMATION CONTACT: Mehul Madia, Division of Supervision, 
Enforcement, and Fair Lending, at (202) 435-7104. If you require this 
document in an alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Where the Bureau has found that an entity has violated Federal 
consumer financial law, the Dodd-Frank Act provides that the Bureau may 
settle its claims against that entity by entering into an 
administrative Consent Order.\1\ Consent Orders describe the Bureau's 
findings and conclusions concerning the identified violations and 
generally impose injunctive relief, monetary relief such as redress and 
civil money penalties, and reporting, recordkeeping, and cooperation 
requirements.\2\ Consent Orders are negotiated by the Bureau and the 
entity (or entities) subject to them and generally have a five-year 
term, although in some instances the Bureau may impose a longer term 
when, in its view, the circumstances warrant it. Bureau staff monitor 
whether entities subject to Consent Orders are complying

[[Page 69483]]

with the terms of those orders, and when appropriate the Bureau takes 
action against those who fail to comply with a Consent Order.\3\
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    \1\ See 12 U.S.C. 5563; see also 12 CFR 1081.120(d). The Bureau 
may also enter into settlements that are filed in Federal court and 
must be approved by the court. See 12 U.S.C. 5564(c). The Bureau may 
enter into settlements with any ``person,'' which includes both 
individuals (i.e., natural persons) and various kinds of entities. 
See 12 U.S.C. 5481(19). As discussed further below, this policy 
applies to entities subject to Consent Orders, and not to 
individuals. This policy therefore generally refers to ``entities'' 
when discussing Bureau Consent Orders.
    \2\ See 12 U.S.C. 5565; see also Consumer Financial Protection 
Bureau, Enforcement Actions, https://www.consumerfinance.gov/policy-compliance/enforcement/actions/.
    \3\ The Bureau may seek to enforce compliance with Consent 
Orders administratively or in court. See, e.g., 12 U.S.C. 5563(a), 
(b), (c), (d), 5564(a). In addition to being a violation of the 
Consent Order itself, a failure to comply with the terms of a 
Consent Order is a violation of the Dodd-Frank Act. See 12 U.S.C. 
5536(a)(1)(A) (making it unlawful for a covered person or service 
provider to ``commit any act or omission in violation of a Federal 
consumer financial law''); 12 U.S.C. 5481(14) (defining ``Federal 
consumer financial law'' to include an ``order prescribed by the 
Bureau'').
---------------------------------------------------------------------------

    Consent Orders play an essential role in the Bureau's enforcement 
work by providing a public, enforceable mechanism to provide relief for 
consumers and to deter future violations, and the Bureau believes that 
in most instances Consent Orders should run for their full negotiated 
terms. At the same time, the Bureau recognizes that Consent Orders can 
impose burdens on the entities subject to them. For example, the 
reporting and record-keeping requirements imposed by Consent Orders can 
be costly and resource-intensive. In addition, in some circumstances, 
the existence of an open Bureau Consent Order can impact whether a 
depository institution supervised by a prudential regulator is 
permitted to open new branches or to merge with or acquire other 
financial institutions--which can burden the institution and 
potentially limit the choices available to consumers. Monitoring 
Consent Orders can also pose a burden for the Bureau itself.
    The Bureau believes there may be exceptional circumstances when 
early termination of a Consent Order against an entity is appropriate 
and can be accomplished in a manner that minimizes the risk of new 
violations of law or harm to consumers. To facilitate such early 
terminations, this policy statement sets forth a process by which an 
entity subject to a Consent Order may apply for early termination and 
articulates the standards that the Bureau intends to use when 
evaluating early termination applications. Under this policy, which is 
not binding on the Bureau, the Bureau's Director intends to retain 
complete discretion and sole authority to terminate Consent Orders.
    In addition to reducing the burdens associated with Consent Orders 
when they are no longer necessary, this policy provides entities with 
an incentive to fully and promptly comply with Bureau Consent Orders 
and to improve their compliance management systems to avoid additional 
violations. This policy also provides guidance to those subject to 
Bureau Consent Orders regarding the circumstances in which the Bureau 
may grant applications for early termination of a Consent Order.

II. Policy on Applications for Early Termination of Consent Orders

A. Conditions for Granting Early Termination

    The Bureau intends to grant applications for early termination of 
Consent Orders if it determines, in its sole discretion, that:
     The entity meets all of the eligibility criteria set forth 
below;
     The entity has complied with the terms and conditions of 
the Consent Order; and
     The entity's compliance position is ``satisfactory'' in 
the institutional product line (IPL) or compliance area (e.g., fair 
lending) for which the Order was issued.
    When an entity applies for termination, its application should 
demonstrate that these conditions are satisfied.
1. Eligibility To Apply for Early Termination
    In order to protect consumers from unwarranted early terminations 
and preserve the resources of potential applicants and the Bureau, the 
Bureau only intends to consider applications for early termination 
under this policy from entities that meet certain threshold eligibility 
criteria.
    First, the entity must be subject to a Consent Order the Bureau 
issued using its authority to conduct administrative adjudication 
proceedings.\4\ This policy does not apply to settlements approved and 
ordered by a court, which can only be terminated early by court order. 
In general, the Bureau does not believe it is an appropriate use of its 
resources to seek to alter the status of settlements entered by courts. 
This policy also does not apply to court orders entered as a result of 
litigation (e.g., after trial or summary judgment), which similarly can 
only be lifted by a court.
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    \4\ See 12 U.S.C. 5563; 12 CFR 1081.120(d).
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    Second, only entities are eligible to apply for early termination 
under this policy.\5\ Individuals (i.e., natural persons) are not 
eligible. As described further below, the Bureau only intends to grant 
early termination where, among other things, an entity demonstrates 
that its compliance management system is ``satisfactory'' in the 
institutional product line in which the Consent Order was issued. The 
Bureau believes it would be impractical to undertake a comparable 
review of whether individuals are likely to comply with the law in the 
future.
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    \5\ For purposes of this policy, an entity is any ``person'' 
under 12 U.S.C. 5481(19) other than an individual.
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    Third, entities may not apply for early termination under this 
policy within the first year after the entry of the Consent Order, or 
until at least six months after all compliance and redress plans 
required under the Consent Order have been fully implemented, whichever 
is later. This eligibility requirement is intended to discourage 
premature applications for termination of Consent Orders and to 
preserve Bureau resources.
    Fourth, entities are not eligible for early termination under this 
policy when the Consent Order imposes a ban on participating in a 
certain industry (e.g., the mortgage industry or debt-relief industry), 
when the Consent Order at issue involves violations of an earlier 
Bureau Order, or when there has been any criminal action related to the 
violations found in the Consent Order.\6\ In each of these situations, 
the Bureau believes that the risk of future violations and harm to 
consumers is heightened and that considering applications for early 
termination of a Consent Order would not be a productive use of Bureau 
resources.
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    \6\ For purposes of this policy, a related criminal action is 
any Federal, State, or local criminal action involving the conduct 
described in the Consent Order in which the entity or any of its 
affiliates, officers, employees, or agents have been named as a 
defendant or as an unindicted co-conspirator, regardless of whether 
there has been a conviction in the action.
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    Finally, absent extraordinary circumstances, the Bureau does not 
intend to consider more than one request from an entity for termination 
of the same Consent Order. This eligibility requirement is intended to 
incentivize entities to submit complete applications at an appropriate 
time following the issuance of a Consent Order, and to discourage 
serial requests that could pose a resource challenge for the Bureau.
2. Compliance With the Consent Order
    When an entity applies for early termination, its application 
should demonstrate its full compliance with the Consent Order, 
including whether the entity has, when required, corrected violations 
of Federal consumer financial law; paid redress, civil money penalties, 
or other monetary relief; adopted appropriate policies and procedures 
to ensure future compliance; submitted adequate reports; and maintained 
required records. The entity's application may reference or attach 
prior submissions to the Bureau relevant to demonstrating its 
compliance with

[[Page 69484]]

the Consent Order as appropriate. Additionally, if applicable, the 
entity's application should reference the results of any supervisory 
work conducted by the Bureau to assess the entity's Consent Order 
compliance and provide any additional information relevant to assessing 
its compliance with the Consent Order.
    Where appropriate, the Bureau will work with the entity to ensure 
that the entity has provided adequate documentation to demonstrate 
compliance. If it has not already done so, the Bureau intends to 
expeditiously review the entity's compliance with the Consent Order and 
conduct follow-up work as needed to determine the entity's compliance. 
The Bureau generally intends to complete this compliance review within 
six months of receiving an application that the Bureau determines is 
complete, although the Bureau retains discretion over when to conduct 
the review to determine compliance with Consent Order provisions given 
the Bureau's other supervisory and enforcement priorities.
3. Satisfactory Compliance System for the IPL or Compliance Area
    In the application for early termination of the Consent Order, the 
entity shall also demonstrate that its compliance management system for 
the IPL or compliance area at issue under the Order is 
``satisfactory,'' or the equivalent of a ``2'' rating under the Uniform 
Interagency Consumer Compliance Rating System. Under that rating 
system, a 2 rating signifies that the entity ``maintains a [compliance 
management system] that is satisfactory at managing consumer compliance 
risk in the institution's products and services and at substantially 
limiting violations of law and consumer harm.'' As part of its 
application to the Bureau for early termination, an entity should 
submit evidence that it has satisfied these elements. If applicable, 
the entity should reference prior supervisory conclusions from a Bureau 
examination regarding the entity's compliance management system for the 
IPL or compliance area at issue.\7\ In addition, if applicable, the 
entity should identify any supervisory rating or conclusion regarding 
its compliance management system in the relevant IPL or compliance area 
that it has received from other State or Federal regulators during the 
pendency of the Consent Order. The entity should also provide the 
Bureau with any additional documentation or information that the Bureau 
considers necessary to determine whether the entity maintains a 
satisfactory compliance management system in the subject IPL.\8\
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    \7\ If, during the pendency of the Consent Order, Bureau 
supervisory staff have already concluded through supervisory work 
that the entity's compliance management system for the IPL or 
compliance area at issue is satisfactory or better, the entity may 
reference that exam and that supervisory conclusion in this portion 
of its application and need not provide additional documentation 
regarding its compliance management system.
    \8\ When evaluating applications, the Bureau does not intend to 
assign a numerical compliance rating under the Consumer Compliance 
Rating System to the entity that has applied for early termination. 
The Bureau assigns such ratings in the normal course of its 
supervisory process, and it intends to continue to do so in the 
context of scheduled examinations of consent order compliance.
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    The Bureau believes that requiring an entity to satisfy this 
condition should help ensure that the entity's compliance position is 
sustainable after the Consent Order is terminated.

B. Process for Submission and Review of Early Termination Applications

    Unless otherwise directed in writing by the Bureau, an entity's 
termination application should be submitted to the Bureau point of 
contact identified in the ``Notices'' section of the Consent Order. 
Prior to submitting an application for order termination, an entity 
should contact the Bureau point of contact established in the Consent 
Order for additional guidance on the form of such a request.\9\ In 
general, the entity's application should demonstrate that the entity 
has satisfied all of the conditions set forth above. The application 
may include exhibits and may reference prior written submissions to the 
Bureau as appropriate. Any factual assertions an entity makes in its 
application should be made under oath (such as in a sworn affidavit) by 
someone with personal knowledge of such facts.
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    \9\ Any other questions regarding submission of an application 
for early termination should also be directed to the designated 
point of contact for the Consent Order.
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    Bureau staff intend to review the application and any supporting 
documentation when considering whether to recommend that the Director 
grant an application to terminate a Consent Order. As noted above, the 
Bureau may request additional information from the entity when 
evaluating the application. The Bureau may also consider any other 
information available to it regarding the entity, including information 
obtained from other government agencies or through other supervisory 
and enforcement activities involving the entity.
    Under this policy, Bureau staff intend to make recommendations to 
the Bureau's Director regarding whether to grant applications for early 
termination. The Bureau's Director intends to retain complete 
discretion and sole authority to terminate Consent Orders. The 
Director's orders granting or denying termination applications will be 
posted on the Bureau's online administrative docket \10\ and 
distributed to the entity. Prior to the Director's decision, an entity 
may withdraw its application at any time.\11\
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    \10\ See https://www.consumerfinance.gov/administrative-adjudication-proceedings/administrative-adjudication-docket/.
    \11\ Prior to the Director's decision, Bureau staff may inform 
the entity if staff intend to recommend denying an application for 
early termination. If an entity withdraws its application, the 
Bureau would still consider the application to constitute the 
entity's one application for early termination for purposes of the 
eligibility criteria set forth in section II.A.1.
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III. Regulatory Requirements

    This Policy Statement constitutes a general statement of policy 
that is exempt from the notice and comment rulemaking requirements of 
the Administrative Procedure Act.\12\ It is intended to provide 
information regarding the Bureau's general plans to exercise its 
discretion and does not impose any legal requirements on external 
parties, nor does it create or confer any substantive rights on 
external parties that could be enforceable in any administrative or 
civil proceeding. Because no notice of proposed rulemaking is required, 
the Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis. The Bureau has also determined that 
this Policy Statement 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.
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    \12\ 5 U.S.C. 553(b). However, this is not a ``statement of 
policy'' as that term is specifically used in Regulation X, 12 CFR 
1024.4(a)(1)(ii).
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    Pursuant to the Congressional Review Act, 5 U.S.C. 801 et seq., the 
Bureau will submit a report containing this policy statement and other 
required information to the United States Senate, the United States 
House of Representatives, and the Comptroller General of the United 
States prior to its applicability date. The Office of Information and 
Regulatory Affairs has designated this Policy Statement as not a 
``major rule'' as defined by 5 U.S.C. 804(2).

IV. Signing Authority

    The Director of the Bureau, having reviewed and approved this 
document,

[[Page 69485]]

is delegating the authority to electronically sign this document to 
Laura Galban, a Bureau Federal Register Liaison, for purposes of 
publication in the Federal Register.

    Dated: October 5, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2020-22360 Filed 11-2-20; 8:45 am]
BILLING CODE 4810-AM-P

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