Banks are concerned that a new regulation on the disclosure of records and information issued by the Consumer Financial Protection Bureau could entice state attorney generals to file lawsuits based on private data collected by the agency’s examiners.
The CFPB said that sharing some confidential data with states may “serve the public interest,” Bloomberg.com reports.
Banks, however, argue that if private data that is collected by the bureau’s examiners is shared with states, traditional relationships between large banks and federal regulators could break.
Banks are particularly concerned that the Office of the Comptroller of the Currency may lose some of its authority to prevent state law enforcement officials from obtaining information from national banks.
“The bureau is suggesting anything we provide will go straight to the state attorneys general,” L. Richard Fischer, a banking lawyer with Morrison Foerster LLC, which represents the American Bankers Association and the Financial Services Roundtable, said, according to Bloomberg.com.
According to Fischer, providing data to states “will terrorize large banks.”
Banks depend on the confidential nature of the examination process in order to keep potential violations of federal consumer law out of the public eye.
If the CFPB notifies attorney generals, state could file lawsuits or subpoena the data, Bloomberg.com reports.
Supporters of the bureau’s policy said that the regulation acts in accordance with the Dodd-Frank Act that called for closer ties between federal and state officials on matters of consumer finance. Building a stronger relationship with state attorneys generals was a signature effort of Elizabeth Warren, the adviser to President Barack Obama who set up the CFPB.