WASHINGTON — The House passed a bipartisan bill on Monday that would expand protections for privileged information that financial institutions share with the Consumer Financial Protection Bureau.
"We have confirmed that the CFPB believes this fix to be acceptable," Rep. Al Green, D-Texas, said on the House floor Monday.
The bill, introduced by Rep. Bill Huizenga, R-Mich., would clarify that when financial institutions turn privileged information over to the bureau, it would not constitute a waiver of attorney-client privilege. Without a legislative fix, a bank could be subpoenaed and the information could be used against them in a lawsuit, the industry has argued.
CFPB Director Richard Cordray said last month that he would support a legislative fix of what he called an oversight in the Dodd-Frank Act. When a bank turns over privileged information to the Federal Reserve, Federal Deposit Insurance Corp. or the Office of the Comptroller of the Currency, it is not considered a waiver of privilege
"Although the bureau has said that they are prepared to take all reasonable and appropriate steps to protect proprietary information, we cannot be sure," Huizenga said.
The House passed the uncontroversial measure by a voice vote. It is expected to pass easily in the Senate, where Sens. Tim Johnson and Richard Shelby have introduced an identical measure.