Banks and other financial institutions are worried about the CFPB’s sharing of information with state regulators and are urging the Bureau to limit such activity. While several sections of the Dodd-Frank Act require the cooperation and joint enforcement of consumer credit laws by the Bureau and the states, banks fear that such information sharing will interfere with the traditional relationship between banks and their federal regulators. The banks’ concerns center on the confidential nature of the examination process, under which examiners have traditionally alerted financial institutions to correct any errors and make necessary changes, all without alerting the public or state regulators. The banks fear that if the state attorneys general are notified of certain information, they could file lawsuits or subpoena additional data.
The banks’ concerns are not unfounded. In April, the Bureau signed a cooperation agreement with the states, which included a commitment to share information to aid in determining enforcement policies and priorities. The Bureau has already begun sharing information collected from its consumer complaint system with some state attorneys general. The Dodd-Frank Act permits, but does not require, the Bureau to share information with the states. The financial institution trade groups are hoping to work with the Bureau to limit this information sharing.