The U.S. Senate, by unanimous consent, has passed a bill (H.R. 4014) that amends the Federal Deposit Insurance Act to provide protection against waiver of the attorney-client privilege when privileged information is shared with the Consumer Financial Protection Bureau (CFPB) or by the CFPB with other federal agencies. The bill, which was also approved by the House of Representatives, is expected to be signed into law soon by President Obama.

The bill has two main components. First, it adds the CFPB to the list of federal agencies that may share privileged information of a regulated entity with other federal agencies without waiver of any state or federal law privilege. Second, it identifies the CFPB as a regulator to whom a regulated entity may submit privileged information without waiving any state or federal law privilege.

The bill is intended to give regulated entities that provide privileged information to the CFPB the same anti-waiver protections they have when dealing with the federal banking agencies or state banking regulators. But those protections have several important limitations.

For example, the legislation contains no anti-waiver protection for privileged information the CFPB shares with state attorneys general or other state agencies. While it protects against waiver if the information the CFPB shares with another federal regulator is covered by a work product, attorney-client, or other recognized privilege, there is no anti-waiver protection for proprietary data, trade secrets, or other confidential information the CFPB passes on to other federal agencies. It also provides no anti-waiver protection for privileged information a regulated entity shares with state agencies other than state banking regulators.

Most significantly, the legislation does not address the fundamental issue of whether the CFPB has the right to compel production of privileged documents in examinations. That unresolved issue will continue to surface if the CFPB insists on receiving privileged documents from its supervised entities.