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March 14, 2012 – A proposed rule on the protection of information submitted by regulated financial institutions to the Consumer Financial Protection Bureau is out for a quick, 30-day public comment period.

The CFPB proposal is intended to back up assurance given by the bureau in January about how privileged information will be treated. The bureau said the submission of privileged information to the CFPB does not waive any applicable privilege with respect to third parties.

"The proposed rule is intended to provide supervised entities further assurances that providing privileged information to the Bureau will not adversely affect the confidentiality of such information," the bureau said in an announcement. "The proposed rule also clarifies that the CFPB's transfer of privileged information to another Federal or State agency does not result in a waiver of any applicable privilege."

CFPB Director Richard Cordray called the proposal "a common sense rule" that conforms to bureau practice. He said it will also help the CFPB further protect consumers "by facilitating the flow of information between the Bureau and its supervised entities."

The Dodd-Frank Act, which established the CFPB, gives the bureau specific authority to issue rules regarding the confidential treatment of information it obtains, the bureau notes.

The rule is being proposed against the backdrop of recent developments in Congress. There are identical bills in the House and Senate that would subject the CFPB to confidentiality requirements imposed on bank and credit union regulators established prior to the Dodd-Frank Act. H.R. 4014 and S. 2099, both supported by NAFCU, would revise the Federal Deposit Insurance Act to clarify that information provided to the CFPB receives the same level of protection as information provided to financial institutions' prudential regulators, such as NCUA.

The CFPB's proposed rule will be published soon in the Federal Register, and comments will be due 30 days after that. NAFCU is preparing a Regulatory Alert for members.