Last week, IBAT filed a comment letter in response to the Consumer Financial Protection Bureau's (CFPB) proposed rule regarding treatment of privileged information.
Under section 1026 of the Dodd-Frank Act, the CFPB can require community and regional banks to provide reports to it and the CFPB may participate in regulatory examinations on a "ride along" basis. Through these reports and examinations, CFPB employees could inspect documents that are subject to the attorney/client privilege. Current federal law allows federal banking agencies to view documents without affecting any privilege; however, the CFPB is not included in the definition of federal banking agency. A bank faced with an examination or a request for documents from the CFPB could find itself between a rock and a hard place: provide privileged documents and risk waiving a privilege or defy the CFPB's request for privileged documents and risk administrative action. IBAT urged the CFPB to suspend implementation of the rule to give Congress time to address the issue. Pending legislation would fix this problem.