WASHINGTON — While all eyes were on the recess appointment of its first director Wednesday, the Consumer Financial Protection Bureau quietly released guidance that directs supervised banks to turn over any and all information it requests.
The bureau said supervised institutions — banks with more than $10 billion in assets, and in the near future, certain nonbanks — may not selectively withhold documents based on their judgment that the materials "are not necessary to the bureau's execution of its responsibilities or that other materials would be sufficient to suit the bureau's needs."
"The supervisory process is based on the supervisor's full and unfettered access to information, and the supervisor is entitled — indeed, duty bound — to ensure that it thoroughly understands the institution in question and has access to all information that, in its independent judgment, may bear on its supervisory responsibilities," the bulletin said. "Failure to provide information required by the bureau is a violation of law for which the bureau will pursue all available remedies."
The industry, however, has said the CFPB's jurisdiction only extends to consumer financial laws. As such, it may only collect information, documents and other materials that relate to consumer financial products and servicers, they said.
"It has a defined jurisdiction, which is consumer retail transactions, and that is not the same thing as safety and soundness examination," said Oliver Ireland, a partner with Morrison & Foerster. "I think there's a real question as to what they can look at and how far their examination authority goes within the organization."
The bulletin also assured banks that sharing information with the bureau would not amount to a waiver of attorney-client privilege — meaning, for example, that plaintiffs could not subpoena the information to use against a bank in court.
Under the Financial Services Regulatory Relief Act of 2006, the bank regulators have the power to receive confidential information from supervised entities without the entities effectively waiving their attorney-client privilege. Industry groups have worried that the provision does not apply to CFPB, because the Dodd-Frank Act did not specifically include it under the Financial Services Regulatory Relief Act.
In its bulletin, the bureau said its powers and authorities "encompass the ability to receive privileged information from supervised entities without effecting a waiver."
"Further, if a supervised entity were ever faced with a claim of waiver, the bureau would take all reasonable and appropriate actions to rebut such a claim," the bullet said.
