CFPB Solicits Public Comment for Civil Investigative Demand (CID) Process

Industry Updates  »  CFPB Solicits Public Comment for Civil Investigative Demand (CID) Process

Although the future leadership of the Consumer Financial Protection Bureau remains in limbo, the agency is requesting public comment on its Civil Investigative Demand process. 

On January 31st, a District of Columbia court overturned an earlier decision that preserved the President’s ability to terminate the director at will. The matter may be headed to the U.S. Supreme Court. Irrespective of the agency’s challenges, the Bureau has posted in the Federal Register solicitation for comment regarding its CID process. There are a number of specific questions raised, and the document suggests the Bureau may be seeking to make changes.

A Quick Overview

For those who may not be completely familiar with the Consumer Financial Protection Bureau, the agency is somewhat unique in that it has both regulatory and enforcement authority. In other words, similar to the other bank regulators (FDIC, OCC, Federal Reserve), they conduct routine regulatory compliance reviews but are also empowered to bring enforcement actions. Whereas the other regulators would have to refer matters to the Department of Justice if they suspect there have been violations of federal law, the CFPB has the authority to initiate such actions on their own. 

Another key distinction is that the Bureau has no safety and soundness obligations – only consumer compliance. The legacy bank regulators, on the other hand, have oversight of not only consumer compliance but are also responsible for monitoring the financial health of institutions under their authority. The goals of consumer compliance and protection sometimes conflict with safety and soundness priorities, and the legacy agencies must balance these two areas of regulation. The Bureau has no such statutory obligations. 

The authority to issue a Civil Investigative Demand (CID) is a powerful enforcement tool that the Bureau has at its disposal. The launching of a CID is unlike a typical regulatory inquiry to which most institutions are accustomed.

Although the initial phase of the CID stops short of actually filing suit against the institution, for all practical purposes it is an initiation of legal action as the net effect is very similar. The agency demands documents, may begin taking depositions, and in essence is collecting information in preparation for formal litigation. 

The Business at Hand

In the request for comment posting in the Federal Register, the CID process is described as follows:

In the course of its investigatory activities, and as authorized by 12 U.S.C. 5562 and 12 CFR 1080.6, the Bureau issues CIDs to entities and persons whom the Bureau has reason to believe may have information relevant to a violation of the laws the Bureau enforces. These demands require recipients to provide the Bureau with information in varying forms: Most frequently some combination of written answers to interrogatories, written reports, documents, tangible things, and testimony. Recipients are required to produce the requested information to the Bureau, which uses such information to further investigations of potential violations of Federal consumer financial laws.

The posting further describes the authority to conduct a CID as “an essential tool” for fulfilling the Bureau’s mission. Again, the posting states:

The issuance of CIDs is an essential tool for fulfilling the Bureau’s statutory mission of enforcing Federal consumer financial law. The Bureau issues CIDs in accordance with the law and in furtherance of its investigatory objectives. The Bureau understands, however, that responding to a CID can impose burdens on the recipients.

All comments must be received by March 27, 2018. The preferred method to comment is electronic per the instructions below, and early submission is requested:

Electronic: Go to https://www.regulations.gov. Follow the instructions for submitting comments.

Email: FederalRegisterComments@cfpb.gov. Include Docket No. CFPB– 2018–0001 in the subject line of the message.

The full text of the posting can be accessed here: https://www.gpo.gov/fdsys/pkg/FR-2018-01-26/pdf/2018-01435.pdf.


How to cite this blog post (APA Style): 
Premier Insights. (2018, February 15). CFPB Solicits Public Comment for Civil Investigative Demand (CID) Process [Blog post]. Retrieved from https://www.premierinsights.com/cfpb-solicits-public-comment-for-civil-investigative-demand-cid-process.


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