This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

59163 

Vol. 78, No. 187 

Thursday, September 26, 2013 

1See 77 FR 39058 (June 29, 2012) (codified at 12 

CFR Part 1081). 

2 Id. at 39058. 

3See 76 FR 45338, 45338 (July 28, 2011). 

4See 77 FR 39058, 39060 (June 29, 2012). 

5 Id. 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1081 

[Docket No.: CFPB–2013–0030] 

RIN 3170–AA29 

Rules of Practice for Issuance of 

Temporary Cease-and-Desist Orders 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Interim final rule with request 

for public comment. 

SUMMARY: The Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

requires the Bureau of Consumer 

Financial Protection (Bureau) to 

prescribe rules establishing procedures 

for the conduct of adjudication 

proceedings. On June 29, 2012, the 

Bureau published the final Rules of 

Practice for Adjudication Proceedings. 

That final rule, however, does not apply 

to the issuance of a temporary ceaseand-desist order (TCDO) pursuant to 

section 1053(c) of the Dodd-Frank Act. 

The Bureau now issues this interim 

final rule governing such issuance and 

seeks public comments. 

DATES: This interim final rule takes 

effect on September 26, 2013. 

Comments must be received on or 

before November 25, 2013 to be assured 

of consideration. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2013– 

0030 or Regulatory Information Number 

(RIN) 3170–AA29, by any of the 

following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail/Hand Delivery/Courier: 

Monica Jackson, Office of the Executive 

Secretary, Consumer Financial 

Protection Bureau, 1700 G Street NW., 

Washington, DC 20552. 

Instructions: All submissions must 

include the agency name and docket 

number or RIN for this rulemaking. In 

general, all comments received will be 

posted to http://www.regulations.gov. In 

addition, comments will be available for 

public inspection and copying at 1700 

G Street NW., Washington, DC 20552, 

on official business days between the 

hours of 10 a.m. and 5 p.m. Eastern 

Time. An appointment to inspect 

comments can be made by telephoning 

(202) 435–7275. All comments, 

including attachments and other 

supporting materials, will become part 

of the public record and subject to 

public disclosure. Submit only 

information that you wish to make 

publicly available. Sensitive personal 

information, such as account numbers 

or Social Security numbers, should not 

be included. Comments will not be 

edited to remove any identifying or 

contact information such as name and 

address information, email addresses, or 

telephone numbers. 

FOR FURTHER INFORMATION CONTACT: John 

R. Coleman, Senior Counsel, Legal 

Division, Consumer Financial 

Protection Bureau, 1700 G Street NW., 

Washington, DC 20552; at (202) 435– 

7254. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On June 29, 2012, the Bureau 

published in the Federal Register the 

final Rules of Practice for Adjudication 

Proceedings pursuant to sections 

1022(b)(1) and 1053(e) of the DoddFrank Act, 12 U.S.C. 5512(b)(1) & 

5563(e).1 That final rule, however, does 

not apply to the issuance of a TCDO 

pursuant to section 1053(c) of the DoddFrank Act.2 The Bureau previously 

invited comments as to whether special 

rules governing such proceedings are 

necessary and, if so, what the rules 

should provide.3 One commenter 

recommended that the Bureau 

promulgate rules governing temporary 

cease-and-desist proceedings initiated 

pursuant to section 1053(c) of the DoddFrank Act and pointed to the Federal 

Deposit Insurance Corporation’s (FDIC) 

rules governing temporary cease-anddesist proceedings, 12 CFR 308.131, as 

an example of such rules.4 The Bureau 

agrees that there should be specific rules 

governing the issuance of a temporary 

cease-and-desist order and now issues 

these interim final Rules of Practice for 

Issuance of Temporary Cease-and-Desist 

Orders (Rules), which govern the 

issuance of orders pursuant to section 

1053(c) of the Dodd-Frank Act, 12 

U.S.C. 5563(c).5

In developing these Rules, the Bureau 

considered the procedures related to 

temporary cease-and-desist orders that 

are followed by other regulatory 

agencies, including the FDIC, the 

Securities and Exchange Commission 

(SEC), and the Office of the Comptroller 

of the Currency (OCC). The Rules most 

closely follow the FDIC’s approach as 

codified in 12 CFR 308.131. The Bureau 

issues these Rules to clarify (1) the basis 

for the issuance of a TCDO; (2) the 

content, scope, and form of a TCDO; (3) 

the procedures governing the issuance 

of a TCDO and the remedies available to 

the Bureau in issuing a TCDO; and (4) 

the rights of persons subject to a TCDO. 

II. Section-by-Section Summary 

Section 1081.100 Scope of the rules of 

practice 

This section is revised to clarify that 

the rules of practice described in this 

section are those contained in subparts 

A, B, C, and D. This section does not 

address the scope of subpart E, which is 

separately addressed in new § 1081.500. 

This section is further revised to 

acknowledge that § 1081.200(d) permits 

commencement of a proceeding through 

a stipulation and consent order. 

Section 1081.200 Commencement of 

proceeding and contents of notice of 

charges 

This section is revised to clarify that 

the section’s stated requirements for 

commencing a proceeding apply to 

proceedings governed by subparts A, B, 

C, and D. The requirements for 

commencing a temporary cease-anddesist proceeding are set forth in new 

§ 1081.501. 

Section 1081.500 Scope 

This section describes the scope of the 

Rules and makes clear that the issuance 

of a TCDO does not affect the 

underlying adjudication proceedings 

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59164 Federal Register / Vol. 78, No. 187 / Thursday, September 26, 2013 / Rules and Regulations 

6Section 1022(b)(2)(A) of the Dodd-Frank Act 

calls for the Bureau to consider the potential 

benefits and costs of a regulation to consumers and 

covered persons, including the potential reduction 

of access by consumers to consumer financial 

products or services; the impact on depository 

institutions and credit unions with $10 billion or 

less in total assets as described in section 1026 of 

the Dodd-Frank Act; and the impact on consumers 

in rural areas. Section 1022(b)(2)(B) directs the 

Bureau to consult with the appropriate prudential 

regulators or other Federal agencies regarding 

consistency with objectives those agencies 

administer. The manner and extent to which these 

provisions apply to a rulemaking of this kind, 

which establishes Bureau procedures and imposes 

no standards of conduct, is unclear. Nevertheless, 

to inform this rulemaking more fully, the Bureau 

performed the analyses and consultations described 

in those provisions of the Dodd-Frank Act. 

instituted by the issuance of a notice of 

charges. 

Section 1081.501 Basis for issuance, 

form, and service 

This section states the conditions 

under which the Bureau, through the 

Director or his or her designee, may 

issue a TCDO; a TCDO’s required format 

and content; the proper method of 

service; and the general parameters of 

the kinds of activities a TCDO may 

prohibit or affirmatively require. 

Section 1081.502 Judicial review, 

duration 

This section describes the process 

under which a TCDO respondent may 

seek judicial review of a TCDO, the sole 

process available for seeking review of 

a TCDO. This section clarifies the 

duration of a TCDO’s effectiveness and 

the authority of the Director or his or 

her designee to terminate, limit, or 

suspend a TCDO. 

III. Legal Authority 

The Bureau promulgates the Rules 

pursuant to its authority to implement 

section 1053 of the Dodd-Frank Act, 12 

U.S.C. 5563(e), as well as its general 

rulemaking authority to promulgate 

rules necessary or appropriate to carry 

out the Federal consumer financial 

laws, 12 U.S.C. 5512(b)(1). 

IV. Section 1022(b) Provisions 

In developing the Rules, the Bureau 

has considered the potential benefits, 

costs, and impacts and has consulted or 

offered to consult with the prudential 

regulators, the Department of Housing 

and Urban Development, the 

Department of Justice, and the Federal 

Trade Commission, including with 

regard to consistency with any 

prudential, market, or systemic 

objectives administered by such 

agencies.6

The Dodd-Frank Act requires the 

Bureau to prescribe rules establishing 

such procedures as may be necessary to 

carry out section 1053 of the Act, which 

provides for temporary cease-and-orders 

in subsection (c). The Rules themselves 

do not impose significant costs upon 

covered persons, but, consistent with 

section 1053, provide a straightforward 

and efficient process for the issuance of 

a temporary cease-and-desist order, and 

a direct route to judicial review. 

The Rules have no unique impact on 

insured depository institutions or 

insured credit unions with $10 billion 

or less in assets described in section 

1026(a) of the Dodd-Frank Act, nor do 

they have a unique impact on rural 

consumers. 

V. Regulatory Requirements 

The Rules relate solely to agency 

procedure and practice and, thus, are 

not subject to the notice and comment 

requirements of the Administrative 

Procedure Act, 5 U.S.C. 553(b). 

Although these Rules are exempt from 

these requirements, the Bureau invites 

comment on them. 

Because no notice of proposed 

rulemaking is required, these 

regulations are not a ‘‘rule’’ as defined 

by the Regulatory Flexibility Act, 5 

U.S.C. 601(2). The Bureau has 

determined that the regulations in this 

subpart do not impose any new 

recordkeeping, reporting, or disclosure 

requirements on covered entities or 

members of the public that would 

constitute collections of information 

requiring approval under the Paperwork 

Reduction Act, 44 U.S.C. 3501 et seq. 

List of Subjects in 12 CFR Part 1081 

Administrative practice and 

procedure, Banking, Banks, Consumer 

protection, Credit, Credit unions, Law 

enforcement, National banks, Savings 

associations, Trade practices. 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Bureau amends Part 1081 

of Chapter X in Title 12 of the Code of 

Federal Regulations as follows: 

PART 1081—RULES OF PRACTICE 

FOR ADJUDICATION PROCEEDINGS 

■ 1. The authority citation for part 1081 

is revised to read as follows: 

Authority: 12 U.S.C. 5563(e); 12 U.S.C. 

5512(b). 

Subpart A—General Rules 

■ 2. Section 1081.100 is revised to read 

as follows: 

§ 1081.100 Scope of the rules of practice. 

Subparts A, B, C, and D of this part 

prescribe rules of practice and 

procedure applicable to adjudication 

proceedings authorized by section 1053 

of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act of 2010 

(Dodd-Frank Act) to ensure or enforce 

compliance with the provisions of Title 

X of the Dodd-Frank Act, rules 

prescribed by the Bureau under Title X 

of the Dodd-Frank Act, and any other 

Federal law or regulation that the 

Bureau is authorized to enforce. Except 

as otherwise provided in this part, the 

rules of practice contained in subparts 

A, B, C, and D of this part do not govern 

the conduct of Bureau investigations, 

investigational hearings or other 

proceedings that do not arise from 

proceedings after a notice of charges or 

a stipulation and consent order. 

Subpart B—Initiation of Proceedings 

and Prehearing Rules 

■ 3. Section 1081.200 is amended by 

revising paragraph (a) to read as follows: 

§ 1081.200 Commencement of proceeding 

and contents of notice and charges. 

(a) Commencement of proceeding. A 

proceeding governed by subparts A, B, 

C, and D of this part is commenced by 

filing of a notice of charges by the 

Bureau in accordance with § 1081.111. 

The notice of charges must be served by 

the Bureau upon the respondent in 

accordance with § 1081.113(d)(1). 

* * * * * 

■ 4. Subpart E is added to read as 

follows: 

Subpart E—Temporary Cease-and-Desist 

Proceedings 

Sec. 

1081.500 Scope. 

1081.501 Basis for issuance, form, and 

service. 

1081.502 Judicial review, duration. 

Subpart E—Temporary Cease-andDesist Proceedings 

§ 1081.500 Scope. 

(a) This subpart prescribes the rules of 

practice and procedure applicable to the 

issuance of a temporary cease-and-desist 

order authorized by section 1053(c) of 

the Dodd-Frank Act (12 U.S.C. 5563(c)). 

(b) The issuance of a temporary ceaseand-desist order does not stay or 

otherwise affect the proceedings 

instituted by the issuance of a notice of 

charges, which are governed by subparts 

A, B, C, and D of this part. 

§ 1081.501 Basis for issuance, form, and 

service. 

(a) In general. The Director or his or 

her designee may issue a temporary 

cease-and-desist order if he or she 

determines that one or more of the 

alleged violations specified in a notice 

of charges, or the continuation thereof, 

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Federal Register / Vol. 78, No. 187 / Thursday, September 26, 2013 / Rules and Regulations 59165 

is likely to cause the respondent to be 

insolvent or otherwise prejudice the 

interests of consumers before the 

completion of the adjudication 

proceeding. A temporary cease-anddesist order may require the respondent 

to cease and desist from any violation or 

practice specified in the notice of 

charges and to take affirmative action to 

prevent or remedy such insolvency or 

other condition pending completion of 

the proceedings initiated by the 

issuance of a notice of charges. 

(b) Incomplete or inaccurate records. 

When a notice of charges specifies, on 

the basis of particular facts and 

circumstances, that the books and 

records of a respondent are so 

incomplete or inaccurate that the 

Bureau is unable to determine the 

financial condition of the respondent or 

the details or purpose of any transaction 

or transactions that may have a material 

effect on the financial condition of the 

respondent, then the Director or his or 

her designee may issue a temporary 

order requiring: 

(1) The cessation of any activity or 

practice which gave rise, whether in 

whole or in part, to the incomplete or 

inaccurate state of the books or records; 

or 

(2) Affirmative action to restore such 

books or records to a complete and 

accurate state, until the completion of 

the adjudication proceeding. 

(c) Content, scope and form of order. 

Every temporary cease-and-desist order 

accompanying a notice of charges shall 

describe: 

(1) The basis for its issuance, 

including the alleged violations and the 

harm that is likely to result without the 

issuance of an order; and 

(2) The act or acts the respondent is 

to take or refrain from taking. 

(d) Effective and enforceable upon 

service. A temporary cease-and-desist 

order is effective and enforceable upon 

service. 

(e) Service. Service of a temporary 

cease-and-desist order shall be made 

pursuant to § 1081.113(d). 

§ 1081.502 Judicial review, duration. 

(a) Availability of judicial review. 

Judicial review of a temporary ceaseand-desist order shall be available solely 

as provided in section 1053(c)(2) of the 

Dodd-Frank Act (12 U.S.C. 5563(c)(2)). 

Any respondent seeking judicial review 

of a temporary cease-and-desist order 

issued under this subpart must, not later 

than ten calendar days after service of 

the temporary cease-and-desist order, 

apply to the United States district court 

for the judicial district in which the 

residence or principal office or place of 

business of the respondent is located, or 

the United States District Court for the 

District of Columbia, for an injunction 

setting aside, limiting, or suspending 

the enforcement, operation, or 

effectiveness of such order. 

(b) Duration. Unless set aside, limited, 

or suspended by the Director or his or 

her designee, or by a court in 

proceedings authorized under section 

1053(c)(2) of the Dodd-Frank Act (12 

U.S.C. 5563(c)(2)), a temporary ceaseand-desist order shall remain effective 

and enforceable until: 

(1) The effective date of a final order 

issued upon the conclusion of the 

adjudication proceeding; 

(2) With respect to a temporary ceaseand-desist order issued pursuant to 

§ 1081.501(b) only, the Bureau 

determines by examination or otherwise 

that the books and records are accurate 

and reflect the financial condition of the 

respondent, and the Director or his or 

her designee issues an order 

terminating, limiting, or suspending the 

temporary cease-and-desist order. 

Dated: September 10, 2013. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2013–23229 Filed 9–25–13; 8:45 am] 

BILLING CODE 4810–AM–P 

FEDERAL HOUSING FINANCE 

AGENCY 

12 CFR Part 1238 

[No. 2013–N–11] 

Orders: Information Reporting With 

Respect to Stress Testing of Regulated 

Entities 

AGENCY: Federal Housing Finance 

Agency. 

ACTION: Orders. 

SUMMARY: Three Orders with identical 

text are being issued by the Federal 

Housing Finance Agency (FHFA) to 

supplement the final rule implementing 

section 165(i)(2) of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act (Dodd-Frank Act). The rule and 

Order require the Federal National 

Mortgage Association (Fannie Mae), the 

Federal Home Loan Mortgage 

Corporation (Freddie Mac), and each of 

the twelve Federal Home Loan Banks 

(Banks) (any of the Banks singularly, 

Bank; Fannie Mae and Freddie Mac 

collectively, the Enterprises; the 

Enterprises and the Banks collectively, 

regulated entities; any of the regulated 

entities singularly, regulated entity) that 

has total consolidated assets of more 

than $10 billion to conduct annual 

stress tests to determine whether the 

companies have the capital necessary to 

absorb losses as a result of adverse 

economic conditions. One Order applies 

to the Federal Home Loan Banks; one 

Order applies to Fannie Mae; and one 

Order applies to Freddie Mac. 

DATES: Each Order with accompanying 

Summary Instructions and Guidance is 

effective on October 28, 2013. 

FOR FURTHER INFORMATION CONTACT: Naa 

Awaa Tagoe, Senior Associate Director, 

Office of Financial Analysis, Modeling 

and Simulations, (202) 649–3140, 

naaawaa.tagoe@fhfa.gov; Fred Graham, 

Deputy Director, Division of Federal 

Home Loan Bank Regulation, (202) 649– 

3500, fred.graham@fhfa.gov; or Mark D. 

Laponsky, Deputy General Counsel, 

Office of General Counsel, (202) 649– 

3054 (these are not toll-free numbers), 

mark.laponsky@fhfa.gov. The telephone 

number for the Telecommunications 

Device for the Hearing Impaired is (800) 

877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

FHFA is responsible for ensuring that 

the regulated entities operate in a safe 

and sound manner, including the 

maintenance of adequate capital and 

internal controls, that their operations 

and activities foster liquid, efficient, 

competitive, and resilient national 

housing finance markets, and that they 

carry out their public policy missions 

through authorized activities. See 12 

U.S.C. 4513. These Orders are being 

issued under 12 U.S.C. 4514(a), which 

authorizes the Director of FHFA to 

require by Order that the regulated 

entities submit regular or special reports 

to FHFA and establishes remedies and 

procedures for failing to make reports 

required by Order. The Summary 

Instructions and Guidance 

accompanying each Order provides to 

the regulated entities general advice 

concerning the content and format of 

reports required by the Order and rule. 

These initial Orders communicate to 

the regulated entities their reporting 

requirements under the framework 

established by the final rule, and the 

accompanying Summary Instructions 

and Guidance provide general 

information on the reporting 

requirements. Separate Orders will be 

issued to advise the regulated entities of 

the scenarios to be used for the initial 

stress testing. FHFA anticipates 

supplementing the rule annually with 

Orders that provide test scenarios and 

other instructions and guidance (which 

may include adjustments to the 

instructions and advice, changes to the 

required elements and format, and 

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