Study on CMP inflation leaves out FI regulators – but wants more info from Treasury (including OCC)

A congressional oversight agency review of civil money penalty (CMP) reporting by federal agencies does not contain information from federal financial institution regulators, primarily because those agencies are not generally required to file agency financial reports (AFRs) about the penalties, a new report released Wednesday states.

However, the report calls on the Treasury Department to provide CMP information from all agencies under its jurisdiction, which includes the regulator of national banks, the Office of the Comptroller of the Currency (OCC).

The report from the Government Accountability Office (GAO), “Civil Penalties: Certain Federal Agencies Need to Improve Inflation Adjustment Reporting” (GAO-18-519), details a study conducted to determine how federal agencies (52 of which were reviewed for the study) were complying with reporting requirements for CMPs under federal law. The study particularly looked at how those agencies were adjusting their CMPs for inflation (as required under the Federal Civil Penalties Inflation Adjustment Act of 1990, IAA).

“The authority of federal agencies to assess and collect civil monetary penalties is a powerful method for enforcing regulatory policies and deterring violations,” states the report, which was distributed to the chairmen and ranking members of the Senate and House Judiciary Committees. “In 2017, federal agencies assessed millions of dollars in civil monetary penalties for violations of statutory requirements, such as phone calls that violated federal telemarketing law and failure to report suspicious orders for controlled substances.”

Federal financial institution regulators also use CMPs for enforcement and deterrence – and the report notes that three federal financial institution regulators – the Federal Reserve, Federal Deposit Insurance Corp. (FDIC) and the Bureau of Consumer Financial Protection (BCFP, formerly known, and referred to in the report, as CFPB) – were among the 52 agencies reviewed for inflation adjustment compliance in the study.

However, the report noted that the FDIC – as well as the Pension Benefit Guaranty Corporation (PBGC) and the Tennessee Valley Authority (TVA) – are not required under Office of Management and Budget (OMB) to report civil monetary penalty information in an AFR.

Officials at the Federal Reserve, the report notes, have previously stated that “pursuant to certain laws or regulations” they have determined that their agency was also not required to submit AFRs under the OMB guidance.

The BCFP, according to the study, also said in 2017 that it was not required to follow the OMB guidance – but the consumer agency did report in its fiscal year 2017 AFR information about the civil monetary penalties within its jurisdiction, including the 2017 annual inflation adjustment of the civil monetary penalty amounts.

A table in the report checks an entry for the National Credit Union Administration (NCUA) that it “reported civil monetary penalty information (including the 2017 annual inflation adjustment) in its 2017 AFR,” but makes no other reference to the agency.

However, the report stated that the Treasury Department (which counts the OCC under its jurisdiction) was one of five federal agencies that did not report, in its 2017 AFRs, all required information about the civil monetary penalties.

“The Secretary of the Treasury should include in Treasury’s fiscal year 2018 AFR information about all civil monetary penalties within its jurisdiction, including the inflation adjustment of the civil monetary penalties, the report states.

Treasury had no comment on the draft report, GAO said.

Civil Penalties: Certain Federal Agencies Need to Improve Inflation Adjustment Reporting

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