Yesterday (12/11/12), the U.S. Senate unanimously passed legislation ensuring that privileged information provided to the CFPB will remain confidential. This legislation, which President Obama is expected to sign, ends months of uncertainty regarding the disclosure of privileged and confidential information to the CFPB. The legislation amends sections 1828(x) and 1821(t) of the Federal Deposit Insurance Act (FDIA) (12 U.S.C. 1811 et seq.) to include the CFPB among the enumerated federal banking agencies covered by the FDIA’s protections. Section 1828(x) provides that the “submission by any person of any information to any Federal banking agency . . .  for any purpose in the course of any supervisory or regulatory process . . . shall not be construed as waiving, destroying, or otherwise affecting any privilege such person may claim.” Section 1821(t) protects the privileged status of confidential information if it is provided to another “covered”  federal agency. This legislative fix was required because the Dodd-Frank Act “inadvertently” did not include the CFPB in the enumerated federal agencies covered by the FDIA.

Even with this legislation, evidently there remains a “missing link” in the chain of privilege and confidentiality for such information submitted to the CFPB.  That is, the status of privileged and confidential information when the CFPB shares such information with governmental agencies or officials OTHER THAN federal agencies now defined to include CFPB. The issue arises due to CFPB’s stated intention and practice of sharing sensitive, privileged and confidential information in its hands with state agencies, state attorneys general, the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC) and other agencies or bodies that are not on the amended “covered agency” list in 12 USC 1821(t) (as amended).

The legislation unanimously passed the House the Representatives in March 2012 but had been held up by Sen. Jim DeMint, who was demanding a vote on the repeal of Dodd-Frank before releasing his hold on this legislation. DeMint released his hold earlier this week after announcing his retirement from the Senate. Earlier this year, the CFPB issued a final rule codifying the doctrine of selective waiver as applied to information provided to the CFPB, but that Rule did little to assuage concerns about the protection of confidential information. Stay tuned to the CFPB-Lawblog for updates and analysis of the impact of this legislation.