Report critiques bureau’s fair lending reorganization

(June 11, 2021) Changes made during its reorganization have led to a loss of fair lending expertise at the CFPB, and other actions taken by the agency could lead to reduced transparency and difficulty in assessing progress toward fair lending goals, according to a report issued by the Government Accountability Office (GAO) this week.

GAO said that a reorganization by the bureau in 2018 shuffled its fair lending activities, resulting in expertise being reallocated throughout the agency. The congressional watchdog stated that, when the agency conducted the reorganization three years ago, it moved its fair lending office from the supervision, enforcement and fair lending division to the office of former Director Kathleen Kraninger reallocating some of the fair lending office’s responsibilities along the way.

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

  • Responsibility was moved from specialist attorneys in the fair lending office to generalist attorneys in its enforcement office.
  • Subject matter expertise and exam support was shifted from dedicated fair lending office supervision staff to a new team in the office of supervision policy.
  • Responsibility for selecting institutions for fair lending exams and identifying enforcement priorities was reassigned 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.

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