The CFPB has issued a final rule rescinding key provisions from its 2022–2024 amendments governing how it designates nonbank financial firms for federal supervision.
The move rolled back the Bureau’s authority to publicly release its final decisions and orders in supervisory designation proceedings. The CFPB said the public disclosure provision, adopted under prior leadership, risked unfairly coercing companies into consenting to supervision rather than contesting it, fearing reputational harm even in cases where no wrongdoing was found.
“Reputational pressure may lead entities to accept supervision not because the facts warrant it, but because of fear that contesting it could damage their public image,” the Bureau stated in its final rule.
Under the reinstated framework, based largely on a 2013 rule, the CFPB will now treat decisions and orders in these proceedings as confidential supervisory information. The agency emphasized that its purpose in designating firms is not to publicly accuse them of misconduct but to assess supervisory risks based on limited evidence.
The rule also reinstated a recommending official to provide internal analysis to the CFPB director before final determinations are made, a change the Bureau said will improve deliberation and fairness. Some procedural updates from 2024, such as allowing video hearings and supplemental written replies, are retained.
Although the rule potentially affects over 150,000 nonbank financial firms, the CFPB has conducted fewer than 20 such proceedings to date.
Ultimately, the Bureau concluded that the harms of publication, especially potential chilling effects on market participation and cooperation, outweighed the limited public benefit.
The rule takes effect 30 days after publication in the Federal Register.
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