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Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations 1022b1 authorizes the Bureau to issue rules as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws.26 The Bureau determines that the additional clarity regarding the status of supervisory guidance provided by the final rule will enable the Bureau to carry out its supervisory responsibilities under Federal consumer financial law more effectively.
Consistent with section 1022b2B
of the Dodd-Frank Act, in developing the final rule, the Bureau has consulted, or offered to consult with, the prudential regulators and the Federal Trade Commission, including regarding consistency with any prudential, market, or systemic objectives administered by those agencies.27
Additionally, consistent with section 1022b2A of the Dodd-Frank Act, the Bureau has considered the potential benefits, costs, and impacts of the final rule.28 The Bureau requested comment on the preliminary analysis presented in the proposal as well as submissions of additional data that could inform the Bureaus analysis of the benefits, costs, and impacts. Such comments as the Bureau received on this subject are discussed below.
Institutions Affected by the Final Rule. The Bureaus final rule applies to supervisory guidance issued by the Bureau, which is addressed to those institutions that are subject to the Bureaus supervisory authority.
Accordingly, the final rule may affect those nondepository institutions that are subject to the Bureaus supervisory authority under section 1024 of the Dodd-Frank Act.29 It may also affect those insured depository institutions and insured credit unions that have more than $10 billion in total assets, together with their affiliates, which are subject to the Bureaus supervisory authority under section 1025 of the Dodd-Frank Act.30 The final rule may additionally affect service providers that 26 12

U.S.C. 5512b1.
U.S.C. 5512b2B. The prudential regulators are the OCC, Board, FDIC, and NCUA.
See 12 U.S.C. 548124 defining prudential regulators.
28 Section 1022b2A of the Dodd-Frank Act, 12 U.S.C. 5512b2A, requires the Bureau to consider the potential benefits and costs of the regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products or services; the impact of the proposed rule on insured depository institutions and credit unions with no more than $10 billion in total assets as described in section 1026 of the Dodd-Frank Act, 12 U.S.C.
5516; and the impact on consumers in rural areas.
29 12 U.S.C. 5514.
30 12 U.S.C. 5515.
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are subject to the Bureaus supervisory authority.31
Potential Benefits and Costs to Consumers and Covered Persons. The final rule reiterates the Interagency Statement Clarifying the Role of Supervisory Guidance 2018 Statement, which is already the policy of the Bureau, and makes it binding on the Bureau. The Bureau evaluates the final rule against a baseline in which no such rule is adopted, and the Bureau is therefore less definitively bound to implement the 2018 Statement in all supervisory activities. Accordingly, the final rule provides the relevant institutions with additional assurance that the Bureaus implementation of current and future supervisory guidance will follow the 2018 Statement.
The final rule should provide the relevant institutions with greater certainty about legal obligations that are addressed in supervisory guidance. This in turn may reduce compliance costs. It is not feasible, however, to quantify or monetize this benefit. The Bureau can only speculate on the greater certainty about legal obligations and the reduction in compliance costs due to the final rule. Further, the benefit from the greater certainty about legal obligations pertains to future as well as current supervisory guidance. The Bureau can only speculate on the frequency of future supervisory guidance. Supervisory guidance is issued from time to time as the need arises, and the Bureau cannot forecast the volume and nature of future supervisory guidance with sufficient precision to quantify or monetize this benefit.
The final rule may also indirectly benefit those consumers that are customers of the relevant institutions, if reduced compliance costs translate into better terms or availability of consumer financial products and services. For the reasons given above, this benefit cannot be quantified or monetized.
A commenter criticized the benefits discussed above and in the Proposal, deeming them implausible and speculative, and argued that there is no link between reduced compliance costs and consumer welfare. The Bureau disagrees with this assessment. While the Bureau does not have data to quantify or monetize the benefit of increased clarity, as a matter of logic and economic theory increased legal clarity can reduce compliance costs of regulated entities. Where there is uncertainty as to the requirements of the law, firms subject to the Bureaus supervisory authority may undertake 31 12

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excess costs to ensure compliance. To the extent that the 2018 Statement has prompted financial institutions to avoid unnecessary compliance costs in cases that comply with applicable laws and regulations and do not harm consumers, but technically contravene the Bureaus supervisory guidance, the final rule will further lower those costs by reducing the uncertainty. With respect to the criticism that compliance costs are not necessarily linked to consumer welfare, the Bureau notes that its burden under section 1022b2A is to consider costs and benefits to covered persons as well as to consumers. Moreover, as noted above, a reduction in unnecessary compliance costs can be passed through to consumers in the form of lower costs of credit.
Finally, the final rule does not impose any new obligations on institutions.
Thus, the final rule should have no costs for institutions. A consumer advocate commenter asserted that the rule would impose costs on consumers by reducing the effectiveness of the agencies supervision operations, leading to potential consumer harm.
The commenter argued that ambiguities in the Proposed Rule and the accompanying Statement would make it difficult for supervision staff at the agencies to determine when to issue supervisory criticisms, to the detriment of consumers who may be affected by practices that would otherwise be subject to a supervisors criticism.
However, the Bureau notes that the 2018
Statement is already the policy of the Bureau. Moreover, the rule is intended to clarify at least some aspects of the 2018 Statement. To the extent that the ambiguities the commenter identifies exist and affect the Bureaus supervision operations, they already exist under the baseline. Thus, as noted in the Proposal, the effects of the rule, as described above, impose no clear costs on any consumers.
Impact on Depository Institutions and Credit Unions With No More Than $10
Billion in Assets. Under section 1026 of the Dodd-Frank Act, the Bureau has only limited supervisory authority with respect to those insured depository institutions and insured credit unions that have no more than $10 billion in total assets,32 and so the Bureau does not normally address supervisory guidance to these institutions.
Accordingly, the Bureau does not expect there to be any appreciable impact on these institutions from the final rule.
Impact on Access to Credit. The Bureau does not expect the final rule to affect consumers access to credit, 32 12

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U.S.C. 5516.

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