H. Rept. 112-417 - AMENDING THE FEDERAL DEPOSIT INSURANCE ACT WITH RESPECT TO INFORMATION PROVIDED TO THE BUREAU OF CONSUMER FINANCIAL PROTECTION112th Congress (2011-2012)
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112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-417
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AMENDING THE FEDERAL DEPOSIT INSURANCE ACT WITH RESPECT TO INFORMATION
PROVIDED TO THE BUREAU OF CONSUMER FINANCIAL PROTECTION
_______
March 20, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Bachus, from the Committee on Financial Services, submitted the
following,
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 4014]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 4014) to amend the Federal Deposit Insurance Act
with respect to information provided to the Bureau of Consumer
Financial Protection, having considered the same, report
favorably thereon without amendment and recommend that the bill
do pass.
Purpose and Summary
The purpose of H.R. 4014 is to clarify that institutions
regulated by the Consumer Financial Protection Bureau (CFPB)
have not risked and will not waive applicable legal privileges
as to third parties when they have shared or will provide
information to the CFPB. The bill also makes clear that the
CFPB can share such information with other Federal agencies
without impacting a regulated institution's attorney-client
privilege or work-product immunity as it applies to third
parties. This statutory change will ensure that privileged
information remains privileged.
Specifically, H.R. 4014 amends Section 11(t)(2)(A) of the
Federal Deposit Insurance Act (the Act) by adding the CFPB to
the list of covered agencies that may share information with
other covered or Federal agencies without waiving any privilege
applicable to the information. The other covered agencies
currently include any Federal banking agency, the Farm Credit
Administration, the Farm Credit System Insurance Corporation,
the National Credit Union Administration, the Government
Accountability Office, and the Federal Housing Finance Agency.
The bill also amends Section 18(x) of the Act to
reemphasize that the submission by any person of any
information to the CFPB in the course of any supervisory or
regulatory process does not waive, destroy, or otherwise affect
any privilege the person may claim with respect to third
parties. It is the Committee's intent that ``any person'' shall
be construed to include any individual, partnership, company,
corporation, association (incorporated or unincorporated),
trust, estate, cooperative organization, firm, society, joint
stock company, or other entity.
Background and Need for Legislation
Many supervised institutions have expressed concern that
providing the CFPB privileged information could waive the
institutions' privilege with respect to third parties. In
response to these concerns, the CFPB stated in a bulletin that
it would take reasonable and appropriate actions to assist
supervised institutions in rebutting any claim that they have
waived privileges by providing information to the CFPB. The
CFPB has also issued a proposed rule stating that any person
who submits information to the CFPB has not waived any
applicable privileges. The proposed rule even provides that no
waiver occurs when the CFPB shares privileged information with
any state or federal agency. Richard Cordray of the CFPB has
also expressed support for a legislative clarification.\1\
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\1\See How will the CFPB Function Under Richard Cordray?: Hearing
Before the Subcomm. on TARP, Fin. Serv. & Bailouts of Pub. & Private
Programs of the H. Comm. on Oversight & Gov't Reform, 112th Cong.
(2012) (statement of Richard Cordray, Director, U.S. Consumer Fin.
Prot. Bureau).
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H.R. 4014, introduced by Representative Bill Huizenga,
addresses these concerns. It clarifies that a supervised
institution that has submitted information to the CFPB has not
waived applicable privileges, and that privilege is not waived
if the CFPB shares such information with other Federal
agencies.
Hearing
The Subcommittee on Financial Institutions and Consumer
Credit held a legislative hearing on February 8, 2012 entitled
``Legislative Proposals to Promote Accountability and
Transparency at the Consumer Financial Protection Bureau.'' The
following witnesses testified:
Mr. Michael J. Hunter, Chief Operating
Officer, American Bankers Association
Mr. Andrew J. Pincus, Partner, Mayer Brown
LLP, on behalf of the U.S. Chamber of Commerce
Mr. Chris Stinebert, President and Chief
Executive Officer, American Financial Services
Association
Mr. Arthur E. Wilmarth, Jr., Professor of
Law, The George Washington University
Committee Consideration
The Committee on Financial Services met in open session on
February 16, 2012 and ordered H.R. 4014 favorably reported to
the House by voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
Committee did not take any record votes on H.R. 4014 on
February 16, 2012. A motion by Chairman Bachus to report the
bill to the House with a favorable recommendation was agreed to
by voice vote.
During consideration of H.R. 4014, the following motion was
considered by the Committee:
A motion offered by Mr. Bachus of Alabama to move the
previous question on H.R. 4014 was agreed to by voice
vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held a hearing and
made findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The objective of H.R. 4014 is to clarify that institutions
regulated by the Consumer Financial Protection Bureau (CFPB)
have not risked and will not waive applicable legal privileges
as to third parties when they have shared or will provide
information to the CFPB. Another objective of the bill is to
make clear that the CFPB can share such information with other
Federal agencies without impacting a regulated institution's
attorney-client privilege or work-product immunity as it
applies to third parties. This statutory change will ensure
that privileged information remains privileged.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
March 19, 2012.
Hon. Spencer Bachus,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4014, a bill to
amend the Federal Deposit Insurance Act with respect to
information provided to the Bureau of Consumer Financial
Protection.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Daniel
Hoople.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 4014--A bill to amend the Federal Deposit Insurance Act with
respect to information provided to the Bureau of Consumer
Financial Protection
H.R. 4014 would clarify that sharing privileged information
with the Consumer Financial Protection Bureau (CFPB) does not
waive certain legal privileges and would not open that
information or a financial institution up to a third-party
subpoena. CBO estimates that enacting this legislation would
have no impact on the federal budget; therefore, pay-as-you-go
procedures do not apply.
H.R. 4014 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
Under current law, sharing privileged information with a
covered agency during the course of a supervisory or regulatory
process does not waive attorney-client, work-product, or other
privileges recognized under federal or state law. Covered
agencies include, for example, any federal banking agency, the
Farm Credit Administration, the Government Accountability
Office, and the Federal Housing Finance Agency.
H.R. 4014 would add the CFPB to the list of covered
agencies, thus protecting information shared with the bureau in
a similar manner. The CFPB has indicated that it would follow
this practice in absence of legislation and has recently issued
a proposed rulemaking to that effect. Enacting this legislation
would eliminate any uncertainty about whether the CFPB can
protect such information.
The CBO staff contact for this estimate is Daniel Hoople.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 4014 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Section-by-Section Analysis of the Legislation
Section 1. FDIA amendments regarding disclosures to the Bureau of
Consumer Financial Protection
This section makes a number of changes to the Federal
Deposit Insurance Act (12 U.S.C. 1811 et seq.).
First, it amends Section 11(t)(2)(A) of the Act by adding
the Bureau of Consumer Financial Protection to the list of
covered agencies that can share privileged information with
other covered and Federal agencies without waiving any
privilege applicable to the information.
Second, it amends Section 18(x) of the Act by establishing
that the submission of any information to the CFPB in the
course of any supervisory or regulatory process shall not be
construed as waiving, destroying, or otherwise affecting any
privilege the person may claim. The section also makes clear
that even absent the CFPB's addition to Section 18(x), sharing
privileged material with the CFPB would not necessarily waive
privilege.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
FEDERAL DEPOSIT INSURANCE ACT
* * * * * * *
Sec. 11. (a) * * *
* * * * * * *
(t) Agencies May Share Information Without Waiving
Privilege.--
(1) * * *
(2) Definitions.--For purposes of this subsection:
(A) Covered agency.--The term ``covered
agency'' means any of the following:
(i) * * *
* * * * * * *
(vi) The Bureau of Consumer Financial
Protection.
* * * * * * *
Sec. 18. (a) * * *
* * * * * * *
(x) Privileges Not Affected by Disclosure to Banking Agency
or Supervisor.--
(1) In general.--The submission by any person of any
information to the Bureau of Consumer Financial
Protection, any Federal banking agency, State bank
supervisor, or foreign banking authority for any
purpose in the course of any supervisory or regulatory
process of [such agency] such Bureau, agency,
supervisor, or authority shall not be construed as
waiving, destroying, or otherwise affecting any
privilege such person may claim with respect to such
information under Federal or State law as to any person
or entity other than [such agency] such Bureau, agency,
supervisor, or authority.
(2) Rule of construction.--No provision of paragraph
(1) may be construed as implying or establishing that--
(A) * * *
(B) any person would waive any privilege
applicable to any information by submitting the
information to the Bureau of Consumer Financial
Protection, any Federal banking agency, State
bank supervisor, or foreign banking authority,
but for this subsection.
* * * * * * *
MINORITY VIEWS
We are pleased to support this bill. The legislation does
not do anything to weaken the underlying law that established
the Consumer Financial Protection Bureau (``CFPB''), but
provides clarity regarding the treatment of confidential
information submitted to CFPB by the institutions it regulates.
We understood that the maintenance of privilege is implicit
in the law, but since the question has been raised, it is a
good idea to make it explicit. By making this explicit, we
remove a potential obstacle to institutions cooperating with
the CFPB, and allow the agency to better carry out its mission
of protecting consumers.
Barney Frank.
Gary L. Ackerman.
Joe Donnelly.
Michael E. Capuano.
Andre Carson.
Gwen Moore.
Carolyn McCarthy.
Melvin L. Watt.
Ruben Hinojosa.
Wm. Lacy Clay.
Joe Baca.
Keith Ellison.
James Himes.
Carolyn B. Maloney.