Concerned that privileged bank information submitted to the Consumer Financial Protection Bureau may not be protected, the American Bar Association has asked Congress to pass legislation that would create a single, consistent standard for handling privileged bank documents.
"As you know, it is settled law that privileged materials shared with federal banking agencies remain privileged as to all other parties,” wrote ABA President William Robinson III in a Feb. 21 letter to key House and Senate leaders. The problem is that the term “federal banking agency” is specifically defined in the Federal Deposit Insurance Act — and the definition does not include the new CFPB.
Prior to the creation of the CFPB last year, federal regulators examined banks for compliance with consumer protection laws — examinations that might include privileged materials without causing a waiver. Now that the CFPB has taken over this function, “there is uncertainty over whether the examination may include the review of privileged materials without causing a waiver of the privilege,” Robinson wrote.
In Jan. 24 testimony before a House subcommittee, CFPB head Richard Cordray acknowledged that there is “real concern” over the issue, and expressed support for legislation that would resolve any doubt, according to the ABA.
Two bills are pending — S. 2099 and and H.R. 4014 — that would explicitly apply the same privilege standards to the CFPB.
The bills would also add the CFPB to the list of agencies that may share privileged information with other agencies specified in the statute without causing a waiver.
The House Financial Services Committee recently approved H.R. 4014, which is now before the full House. The Senate version is before the Banking Committee, whose chairman, Tim Johnson (D-S.D.), and ranking member, Richard Shelby (R-Ala.), are co-sponsors.