ABA President Linda A Klein recently urged the Consumer Financial Protection Bureau (CFPB) to modify a proposed rule on disclosure of records and information that the association believes may threaten the attorney-client privilege.
In comments submitted Oct. 24 to the CFPB, Klein expressed the ABA’s strong support for preserving the attorney-client privilege and the work product doctrine. She also expressed serious concerns over provisions in the proposed rule that would allow the CFPB to share the privileged information it receives from supervised or regulated entities with many types of foreign, state and other agencies that are not covered by statutory privilege waiver provisions established by 12 U.S.C. §§ 1828(x) and 1821(t).
Those statutory provisions allow the CFPB and other listed bank regulatory agencies to receive privileged information from entities without waiving the privilege as to third parties, even if the information is later shared with other federal agencies.
Klein also voiced concerns about other related provisions that would do the following: allow the CFPB to share an entity’s privileged supervisory information with any other agency, not just those agencies with supervisory jurisdiction over the entity; allow the CFPB inspector general to disclose privileged information “as needed” in accordance with the Inspector General Act; and relax the CFPB’s duty to notify an entity in advance when its privileged information is provided to Congress.
In her comments, Klein also pointed out that other provisions that were designed to protect the privileged status of information may not be effective in preventing waiver of the privilege vis-à-vis third parties when the information is shared with non-federal agencies not covered by 12 U.S.C. §1821(t).
She said that the ABA “recognizes and appreciates the CFPB’s effort to strike the proper balance between the need to protect confidential and privileged information and the need to fulfill the Bureau’s important supervisory and regulations objective,” but recommends that the rule be modified. The ABA-proposed change would clarify that, at most, the CFPB will only share privileged materials it receives from supervised and regulated entities with other federal agencies that are specifically referenced in Section 1821(t), not with other foreign and state agencies that could result in a waiver of the privilege.
Klein added that if the CFPB believes that it will be necessary for it to share privileged information with foreign, state, and other governmental bodies in the future, the bureau should support congressional legislation to amend the law to expressly permit such sharing without waiving the privilege.