Prudential regulators, who used to be interested in questions of legality, now are taking their cues from the Consumer Financial Protection Bureau, and that could be bad news for smaller banks, according to Ballard Spahr partner Alan S. Kaplinsky.

Mr. Kaplinsky, Practice Leader of Ballard Spahr's Consumer Financial Services Group, said there seems to be a fair amount of competition now among the four bank agencies to see who can be strongest on consumer protection.

“The days of prudential regulators being paternalistic about this are long gone," he said. "What we’re hearing from our community bank clients is that the prudential regulators are more focused on consumer compliance than ever before and that’s largely the result of what’s going on with the CFPB. No one wants to get caught with their pants down. They all want to be as tough as the CFPB.”

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Bank Regulation and Supervision
Consumer Financial Services