Lawmakers are considering enhanced protection for banks against the Consumer Financial Protection Bureau, which has the authority under the Dodd-Frank Act to examine financial institutions’ records and books to ensure that financial products are in compliance with federal statutes.
Banks argue that the CFPB’s authority to view confidential documents effectively leaves them powerless against federal inquests. The financial institutions also worry that when they hand these documents to the agency, they will be waiving privacy protections that designate the communications as confidential.
Both Democrats and Republicans are also concerned about the power granted to the agency through the Dodd-Frank, which has drawn much criticism from both sides of the aisle.
A House panel led by Republicans will hear the matter on Wednesday, while some Democrats like Representative Carolyn Maloney (D-N.Y.) are sponsoring a bill that will add safeguards to financial institutions’ private and confidential documents, should the CFPB order that they be handed over.
“While the CFPB’s General Counsel has indicated that it plans to extend the privilege, I believed it should be codified to avoid any confusion the same way it is for other regulators,” Maloney said in a statement on Tuesday.