WASHINGTON — A bill that would prevent the Consumer Financial Protection Bureau from releasing confidential bank information to third parties appears to be on the fast track to becoming law.
Identical versions of the bill were introduced in both the House and Senate earlier this month after CFPB Director Richard Cordray voiced his support. Now both versions are poised to move quickly, according to sources.
The House bill, which was passed by the Financial Services Committee last week, may get a vote in the entire House as early as next week, according to a spokeswoman for Rep. Bill Huizenga, the Michigan Republican who introduced the measure.
The route to Senate passage is less clear, but there are hopes in the upper chamber that the measure will be able to move quickly to the Senate floor without a vote in the Banking Committee.
Although no one in Congress has spoken out against the bill, it could be tricky to pass it through the Senate, where unrelated amendments can derail even uncontroversial bills.
But the bill's co-sponsors include both Democratic Sen. Tim Johnson, who chairs the Banking Committee, and Sen. Richard Shelby, the committee's top Republican, which should help the measure's chances.
"We're still working on a path forward," said a Democratic aide on the Banking Committee. "But the bill does have a lot of bipartisan support, and we're going to try to continue to build additional bipartisan support in order to get this technical correction approved."
The bill would make clear that the CFPB cannot turn over privileged information that it receives from banks — for example, advice that a bank receives from a lawyer — to outside parties. Such outside groups could include state law enforcement officials and other federal agencies.
The legislation grew out of an apparent oversight in the drafting of the Dodd-Frank Act, which established the bureau. Dodd-Frank did not add the CFPB to the list of federal banking agencies covered by an earlier law that protects privileged materials.
Although the CFPB recently issued a legal opinion stating that it was in the same boat as any other banking agency with regard to the treatment of privileged materials, industry officials worried that the bureau's view might not be binding in court. So they sought a change in the law.
The American Bar Association endorsed the bill this week in letters to House and Senate leaders.
"Absent legislation, privileged information within a draft CFPB report could lose its privileged status when shared with the prudential regulators," the letters state. "The attorney-client privilege is a bedrock legal principle that enables both individual and organizational clients to communicate with their lawyers in confidence."
The CFPB's willingness to work with the banking industry on the issue — at a time when many bankers are skeptical of the bureau's intentions — drew favorable reviews from industry officials.
"We hope this is an indication of approaching problems practically in the future," said Richard Riese, senior vice president for the American Bankers Association's Center for Regulatory Compliance.
Reginald Brown, a lawyer at Wilmer Hale, said that by working with the banking industry on the issue, Cordray showed a pragmatic streak.
"This is something that could be done in theory before Memorial Day, which would be great," Brown said. "It's one of those rare occurrences where all the stars are aligned."