ABA Applauds Congress for Passing Legislation that Protects Privileged Information Submitted to the Consumer Financial Protection Bureau
WASHINGTON, D.C., Dec. 13, 2012 from ABANow.org
The Senate gave final approval Dec. 11 to H.R. 4014, legislation supported by the American Bar Association that would create a single standard for the treatment of privileged information submitted to all federal agencies that supervise banks and other financial institutions, including the Consumer Financial Protection Bureau (CFPB). President Obama is expected to sign the measure into law.
“It is very encouraging to see the Senate and the House come together to protect cardinal values like the attorney-client privilege,” said American Bar Association President Laurel Bellows.
When Congress created the CFPB in 2010 and granted it the authority to examine and regulate large banks, it neglected to update key provisions of the decades-old Federal Deposit Insurance Act that specifically authorize traditional bank regulators — such as the FDIC and the Federal Reserve — to keep certain information received from banks privileged and confidential with respect to third parties. Because the CFPB was not explicitly covered under the existing Act’s definition of “federal banking agency,” many — including the ABA — were concerned that if a bank or other supervised entity provided the CFPB with the privileged information it sometimes requests during the examination process, the privilege could be waived to third parties, potentially causing severe harm to the submitting entity.
H.R. 4014 eliminates this uncertainty by clarifying that the CFPB, like the other federal banking regulators, can receive privileged information from banks and other supervised entities and then share that information with other federal agencies without waiving the privilege to third parties, thereby providing consistent regulation for privileged information across all federal banking agencies. Now that H.R. 4014 has been approved overwhelmingly by the House and the Senate, the bill goes to President Obama for his signature.
“This is a clear win for lawyers, their clients and the public,” Bellows said. “The attorney-client privilege is a bedrock legal principle that is essential to providing effective counsel. This legislation removes the barriers that may have discouraged clients — be they banks or average consumers — from seeking legal advice. In fact, this new legislation encourages clients to obtain their lawyers’ guidance to comply with the law.”
The ABA was joined in support for H.R. 4014 by a large coalition of numerous bars across the country, including the following: the Alabama State Bar, the Illinois State Bar Association, the Mississippi Bar, the Missouri Bar, the State Bar of Nevada, the New York State Bar Association, the Association of the Bar of the City of New York, the North Carolina State Bar, the Ohio State Bar Association, the Oregon State Bar, the Pennsylvania Bar Association and the South Carolina Bar.
With nearly 400,000 members, the American Bar Association is the largest voluntary professional membership organization in the world. As the national voice of the legal profession, the ABA works to improve the administration of justice, promotes programs that assist lawyers and judges in their work, accredits law schools, provides continuing legal education, and works to build public understanding around the world of the importance of the rule of law.