CFPB’s Guidance to Supervised Banks Says Privilege Waiver Concerns Are No Reason for Withholding Information

By: Stephanie C. Robinson

As supervisor of large depository institutions, credit unions, and their affiliates, the CFPB expects such supervised institutions to share with it all documents that CFPB requests, even if the document is protected by the attorney-client privilege. Banks routinely share privileged documents with their banking regulators without concern about facing a claim of waiver because of two statutory provisions (one for banks and another for credit unions) that say submitting privileged information to a prudential regulator does not result in a waiver as to any other person or entity. But those statutory provisions have not been amended to encompass information provided to the CFPB.

CFPB Bulletin 12-01, issued Wednesday, sets forth the CFPB’s position on privileged information that supervised institutions provide to the CFPB. Providing privileged information and documents to the CFPB does not effect a privilege waiver for two reasons. First, since turning over privileged information to the CFPB is mandatory and not voluntary, the guidance says, the supervised institutions will not waive any claim of privilege that attached to the information. The guidance cites to a district court case and an OCC interpretative letter for support. Second, the CFPB believes that Congress intended its authority to be equivalent to that of the prudential regulators. Hence, according to the guidance, the CFPB, like the prudential regulators, has the power to receive privileged information from supervised entities without effecting a waiver of privilege. This position is consistent with the Dodd-Frank Act’s stated goal of consistent enforcement of Federal consumer financial law.

The guidance says that the CFPB will only request privileged information when it determines that the information is material to its supervisory objectives and the agency cannot practicably obtain the same information from non-privileged sources. It also suggests that the CFPB will assist supervised institutions in rebutting any claims that they have waived privileges by providing information to the CFPB.

This guidance may be helpful in alleviating at least some of the concern that supervised institutions have been expressing about turning over privileged information and documents in the course of supervision, but it is not binding on courts.

A related issue that the guidance addresses involves the CFPB’s information sharing. Although the agency’s rules allow it to share confidential supervisory information (including privileged documents) with law enforcement agencies and other government agencies, the guidance states that CFPB will not routinely share such information with agencies that are not engaged in supervision. According to the guidance, only in “very limited” circumstances and upon review of all relevant facts and circumstances will the CFPB share confidential supervisory information with law enforcement agencies, such as State Attorneys General.

To obtain access to confidential supervisory information, State Attorneys General would have to provide certain information to the CFPB in accordance with the agency’s Disclosure of Records and Information Rule issued last July. While State Attorneys General or other law enforcement agencies might be able to obtain the privileged information in the CFPB’s discretion, the disclosure rule provides that they may not further disclose the information without the CFPB’s express permission. Similar to the rules of the federal banking agencies, the CFPB disclosure rule provides that all confidential supervisory information given to the CFPB by a supervised institution remains the property of the CFPB unless the General Counsel provides otherwise in writing. In addition, the disclosure rule provides that the CFPB’s disclosure of confidential information to third parties does not constitute a waiver of any privilege the supervised institution could claim under federal law.

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