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November 08, 2011

CFPB announces 'early warning' notice

Nov. 8, 2011 – The Consumer Financial Protection Bureau on Monday released an outline of its plans for notifying institutions when they are being considered for enforcement action by the bureau.

For now, just the three largest credit unions are subject to CFPB enforcement. Other credit unions will come under this bureau authority once they achieve total assets of more than $10 billion.

The CFPB Early Warning Notice process allows the subject of an investigation to respond to any potential legal violations that CFPB enforcement staff have flagged in advance of a decision on CFPB legal action. "The Early Warning Notice announced today strikes a balance between the goal of fairness to those being investigated and our mission to protect consumers," said Raj Date, the Treasury secretary's special advisor on the. "This process will help us fulfill our commitment to transparency in enforcing the law."

The process is modeled on similar procedures that have been successful at other federal agencies, the bureau says. First, the Office of Enforcement will explain to individuals or firms that evidence gathered in a CFPB investigation indicates they have violated consumer financial protection laws. Recipients of an Early Warning Notice are then invited to submit a response in writing, within 14 days, including any relevant legal or policy arguments and facts.

The early warning notice isn't required by law, the bureau notes, and the decision to even provide notice in some cases "is discretionary and will depend on factors such as whether prompt action is needed," it says.

The CFPB Office of Enforcement, which is led by Richard Cordray, made public its rules regarding the initiation and execution of enforcement investigations this July.

Cordray is the president's nominee to fill the CFPB director post. That nomination has been cleared by the Senate Banking Committee and awaits Senate action.