Bankers are concerned about how sharing information with the Consumer Financial Protection Agency will affect client confidentiality. "Typically, information given to a third party loses attorney-client privilege, and prior legislation formally exempted the other bank regulators from that rule," writes American Banker's Joe Adler. "But Dodd-Frank did not expressly include the CFPB in that exemption.”
On Thursday the bureau issued a rule stating that "a financial institution's transfer of privileged information to the CFPB does not damage the confidential nature of that material." But will that be enough to reassure bankers?
Bankers have been hoping for legislation to codify CFPB confidentiality. Such a bill has bipartisan support in Congress and the CFPB supports it, though qualifying in the rule that "the bureau does not believe such legislation is necessary."
But that bill has been held up by senators who are "hoping for passage of a larger bill that would make several technical changes to Dodd-Frank," writes Adler.
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