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March 01, 2012

ABA Supports Uniform Treatment of Privileged Materials by Banking Agencies, New CFPB

ABA President Wm. T. (Bill) Robinson III last month urged prompt enactment of S. 2099 and H.R. 4014, bills that the association maintains would create a single, consistent standard for the treatment of privileged information submitted to all federal agencies that supervise banks, including the new Consumer Financial Protection Bureau (CFPB).

By explicitly applying the same privilege standards to information submitted to the CFPB that currently apply to any submissions to a federal banking agency, the legislation “would help ensure a more integrated, consistent and coordinated approach to the regulation of financial services providers,” Robinson wrote in his Feb. 21 letters to House leaders, the House Financial Services Committee, and the Senate Committee on Banking, Housing and Urban Affairs.

He said that the legislation, which would amend the Federal Deposit Insurance Act, would advance three of the key financial regulatory reform principles adopted in 2009 by the ABA that were previously developed by the association’s Task Force on Financial Markets Regulatory Reform:

  • the regulation and supervision of financial intermediaries, products and services should be integrated and comprehensive to the extent appropriate to protect investors and consumers of financial products;
  • functionally similar products and services should be subject to the same or essentially equivalent regulation; and
  • federal, state and territorial examination, regulation, supervision and enforcement with regard to the financial services industry should operate in a complementary and coordinated manner.

The legislation also adds the CFPB to the list of agencies that may share privileged information with other agencies specified in the statute without causing a waiver. Absent the legislation, Robinson said, privileged information within a draft CFPB report could lose its privileged status when shared with the prudential regulators, while privileged information in the draft report of a prudential regulator would remain privileged even after being received by the CFPB.

The ABA strongly supports the preservation of the attorney-client privilege, Robinson emphasized, calling it a “bedrock legal principle” that enables clients to communicate with their lawyers in confidence, promotes compliance with the law, and facilitates self-investigation to the benefit of society at large.

The House Financial Services Committee approved H.R. 4014 by voice vote on Feb. 16. There has been no action on the Senate bill, which is pending in the Senate Banking, Housing and Urban Affairs Committee.

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