This column is part of a series of articles on the new Consumer Financial Protection Bureau and the upcoming wave of regulations affecting the consumer financial industry.
Major bank and financial services trade associations are trying to push back against the Consumer Financial Protection Bureau’s plans to share with states the data it collects from financial institutions during the supervision process. While the Bureau insists that information sharing serves the public interest, banks are legitimately concerned that the distribution of data—particularly confidential data—will upset the delicate supervisory process and ultimately limit the capability of banks to serve their customers.
In July, the Bureau issued its “Interim Final Rule on Disclosure of Records and Information” (the Disclosure Rule) which, among other things, provides for the confidential treatment of information the Bureau receives in during the exercise of its various duties under the federal consumer financial protection laws, and provides procedures for the public to obtain information from the Bureau under the Freedom of Information Act and other methods. The Dodd-Frank Act allows, but does not require, the Bureau to share with the states information it gathers from its consumer complaint system. In August, the Bureau began sharing that information with some state attorneys general.
On September 26, four prominent trade associations—the American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable and the Mortgage Bankers Association—collectively commented on the Disclosure Rule, expressing grave concerns that the rule “could lead to frequent and routine disclosure of confidential information to third parties and that such disclosure would do little, if anything, to advance the mission of the [Bureau], while causing considerable harm to financial institutions, their customers and the economy as a whole.”