The Consumer Financial Protection Bureau has attempted to reassure lenders that their attorney-client privilege will be protected in any information turned over to the agency. But lender and their lawyers are not convinced.
"The banking industry has warned that turning over privileged information to the CFPB amounts to a waiver of privilege, which could open the door to subpoenas from civil plaintiffs who may want to use the information to build a legal case against a bank or mortgage lender," writes American Banker's Kate Berry.
And so, lenders are debating: should they ask their lawyers if some decision might run afoul of the CFPB, or will that just render them more vulnerable for even asking?
"There is a fear that privileged information would be discoverable down the line," says John Konyk, an executive director of government affairs at Weiner Brodsky.
The CFPB finalized its own rule in June that banks' attorney-client privileges will be protected in information turned over to the agency. But it also supported legislation to make that exemption from waiving rights to the privilege more formal, as it is for other bank regulatory agencies.
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