The new financial regulator, the Consumer Financial Protection Bureau, will only directly regulate financial institutions with at least $10 billion in assets, which leaves most community banks outside of its reach. These community banks, however, will still experience effects of the new regulation.

Christopher J. Willis, a partner in Ballard Spahr’s Atlanta office and a member of the firm’s Consumer Financial Services Group, points out that the CFPB maintains strong ties with state attorneys general across the country. The agency plans to foster that relationship by sharing information. Mr. Willis suspects that the CFPB will share what information it gets about community banks with state attorneys general. The CFPB could collect bank information and funnel it to attorneys general through the customer complaints that it plans to collect for all financial institutions.

Although banks cannot prevent this information share, they can avoid regulatory trouble by being proactive about complaints. “You can control regulatory risk by thoroughly handling customer complaints. The better you can resolve the complaints and the more satisfaction you can give to your customers, the better you can mitigate the risk of government enforcement,” said Mr. Willis.

Related Practices

Bank Regulation and Supervision
Consumer Financial Services