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112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-417

======================================================================

 
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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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.