September 27, 2011
The option for agency examiners from the Consumer Financial Protection Bureau to pass along private info to state attorneys general “will terrorize large banks,” said L. Richard Fischer, a banking lawyer with Morrison Foerster LLC who represents the American Bankers Association and the Financial Services Roundtable.
“The bureau is suggesting anything we provide will go straight to the state attorneys general,” he said, according to Bloomberg.
If state AGs are notified, lawsuits or subpoenas for the data could be issued, Fischer added, noting that private lawsuits might also result. Many banks are urging the CFPB to restrict the amount of data regulators can share with the state AGs.
“Such cooperation could upend the traditional relationships between large banks and their federal regulators, notably the Office of the Comptroller of the Currency,” explains Bloomberg. “The OCC has used its authority to prevent state law enforcement officials from obtaining information from national banks including JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC).”
The CFPB invited public comments on the rule through Sept. 26, which Bloomberg reports is a sign the agency may revise the policy. Click here to read Fischer’s full explanation of why this policy poses significant problems for major banks.