Last Tuesday, the Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Act, offered a peek into its plans for supervising banks with assets of more than $10 billion, as well as their subsidiaries and affiliates. The bank supervision program will begin next week, on July 21, 2011.

Not surprisingly, the bureau will examine the banks to ensure that they comply with consumer financial protection legal requirements. The CFPB's supervision will be handled on an ongoing basis, including pre-exam reviews of information and data analysis, on-site exams, and follow-up monitoring. Most banks will face periodic exams, although the most complex will see a “year-round supervision program.”

During the exams, the CFPB's will review internal procedures and interview personnel to assess the bank's ability to detect and remedy regulatory violations that may harm consumers. They'll also review fair lending practices, as well as compliance with regulations over the lifecycle of a product or service.

For companies that aren't fully compliant, the Bureau will pursue corrective actions to ensure that violations don't recur.

Many of the Bureau's supervisory employees are transferring from other agencies, including the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. By the end of the month, the Bureau expects to have on staff more than 100 such transferees. Eventually, the CFPB will employ several hundred examiners with experience at both other regulatory agencies as well as private industry. Those who are new to consumer financial protection will “receive extensive technical and professional skills training,” according to the announcement. 

The CFPB examiners and managers will be organized by region, with examiners working from offices in Chicago, New York, San Francisco, and Washington D.C. “Having examiners and field managers focused on these regions will help ensure that the CFPB understands the business practices and dynamics in different markets throughout the country,” the Bureau said in a statement.

In early August, the CFPB will send letters with additional information to the 111 banks whose assets top $10 billion.

The Bureau also will post online the initial phase of its Examination Manual, along with an invitation for comments. However, the announcement didn't provide a timeframe for doing so.