Reuters: Regulatory News: Consumer agency adds legal protections for documents

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Consumer agency adds legal protections for documents Jun 28th 2012, 18:57 Thu Jun 28, 2012 2:57pm EDT * CFPB protects sensitive information from subpoena * Rule mirrors protections at other regulators By Emily Stephenson June 28 (Reuters) - Banks will retain attorney-client privilege and other legal protections over sensitive information submitted to the Consumer Financial Protection Bureau under a rule the U.S. consumer watchdog adopted on Thursday. The rule would protect certain legal memos, internal audits and other documents submitted to the agency from subpoena by outside groups. Bank executives had protested that confidential materials handed to the agency could be obtained by independent consumer advocates or groups trying to sue the firms. The new rules are similar to protections in place at other banking regulators. They will apply to privileged information provided to the consumer agency as part of its supervisory or regulatory processes, as well as to materials the CFPB gives to other federal or state agencies, the agency said. "We are committed to safeguarding the confidential information of the institutions we supervise to ensure the bureau is best equipped to do its job and protect consumers," agency director Richard Cordray said. "This new rule supports the free flow of information that is essential to an effective supervision program." The watchdog agency was established by the 2010 Dodd-Frank financial oversight law to police consumer products like mortgages and credit cards. It opened its doors in July 2011. Supporters say the CFPB will protect consumers from unfair banking practices, but banks and business groups have said it could stifle lending through excessive regulation. Democrats and Republicans have agreed on the need to extend legal protections to information the agency collects from private institutions, although legislation to implement provisions similar to those in place at the Federal Deposit Insurance Corporation and the Federal Reserve has not passed. The CFPB said Thursday that the Dodd-Frank law gives it the power to establish such protections. Link this Share this Digg this Email Reprints

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