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CFPB privilege bill stalls in Senate

By Marcie Geffner · Bankrate.com
Thursday, April 5, 2012
Posted: 2 pm ET

The Consumer Financial Protection Bureau, or CFPB, has proposed a rule that would help to ensure that privileged information submitted to the bureau by regulated banks, credit unions and other financial institutions would remain confidential.

The bureau has already advised the institutions it supervises that submitting such information doesn't waive any applicable confidentialities with respect to third parties. But the proposed rule is intended to give the companies further assurances that providing the information won't negate the confidentiality. The proposed rule also clarifies that the bureau's transfer of such information to another federal or state agency likewise wouldn't result in a confidentiality waiver, the CFPB said.

One general concern -- from the banks' point of view -- is that consumer advocacy groups might try to use internal memos and other documents that banks submit to the CFPB to sue the banks for whatever reasons might arise, according to news reports.

CFPB Director Richard Cordray said in a statement that the rule was consistent with the bureau's practice of guarding such confidentiality.

"This rule will allow us to further protect consumers by facilitating the flow of information between the bureau and its supervised entities," Cordray said.

The proposed rule is open for comment for 30 days after publications in the Federal Register.

Meanwhile, the U.S. House of Representatives has passed a bill, H.R. 4014, that also would ensure that financial companies or individuals that give information to the CFBP won't thereby waive their right to privacy protections.

Rep. Bill Huzienga (R-Mich.) said in a statement that the bill "adds needed oversight" and will "create more peace of mind for financial institutions while also protecting consumers."

Quick passage of similar legislation in the U.S. Senate has been blocked, however, according to the American Bankers Association's Dodd-Frank Tracker website.

Follow me on Twitter: @marciegeff.

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