Fair lending office reorg in 2018 led to loss of expertise, threatened transparency, CFPB told in report

Changes made during its reorganization have led to a loss of fair lending expertise at the federal consumer financial protection agency, and other actions taken by the agency could lead to reduced transparency and difficulty in assessing progress toward fair lending goals, according to the congressional watchdog.

In a report issued Monday, the Government Accountability Office (GAO) said that a reorganization by the Consumer Financial Protection Bureau (CFPB) in 2018 shuffled its fair lending activities, resulting in expertise being reallocated throughout the agency.

In Monday’s report, the GAO stated that when the agency conducted the reorganization in 2018, it moved its fair lending office from the supervision, enforcement and fair lending division to then-Director Kathleen Kraninger’s office, reallocating some of the fair lending office’s responsibilities along the way.

More specifically, the GAO said those key changes in the 2018 reshuffling:

  • Moved responsibility from specialist attorneys in the fair lending office to generalist attorneys in its enforcement office.
  • Shifted subject matter expertise and exam support from dedicated fair lending office supervision staff to a new team in the office of supervision policy.
  • Reassigned responsibility for selecting institutions for fair lending exams and identifying enforcement priorities from the fair lending office to supervision offices and the office of enforcement at the bureau.

“As CFPB planned and implemented the reorganization, it did not substantially incorporate key practices for agency reform efforts GAO identified in prior work – such as using employee input for planning or monitoring implementation progress and outcomes,” the congressional watchdog stated.

The GAO also said that it identified “challenges related to the reorganization” that included loss of fair lending expertise and specialized data analysts. The agency indicated those losses may have “contributed to a decline in enforcement activity in 2018.”

In any event, the report stated, the bureau has not assessed how well the reorganization met its own goals or how it affected fair lending supervision and enforcement efforts.

“Collecting and analyzing information on reorganization outcomes would help CFPB determine the impact of the changes and identify actions needed to address any related challenges or unintended consequences,” the GAO report stated.

Fair Lending: CFPB Needs to Assess the Impact of Recent Changes to Its Fair Lending Activities