Legal Seminar, Chicago, IL

12 U.S.C. § 1828(x)(1)

• “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 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 Bureau, agency, supervisor, or authority.” 12 U.S.C. § 1828(x)(1). • Regulators best argument. However, nothing in Section 1828(x) gives the Agencies the authority to compel a waiver of the Privilege. • Statute does not supersede common law rights unless that override is expressly stated. Avgoustis v. Shinseki , 639 F.3d 1340, 1341 (Fed. Cir. 2011). • Broad investigatory and examination authority does not override the privilege absent clear Congressional intent. Unidted States v. Louisville & Nashville Railroad Co ., 236 U.S. 318, 325 (1915). • In Civil Aeronautics Board (CAB) v. Air Transport Association , 201 F. Supp. 318 (D.D.C. 1961), the court rejected CAB’s effort to enforce a subpoena and compel production of materials protected by the privilege. • “The Court is of the opinion that the attorney-client privilege may be asserted in the proceeding pending before the Civil Aeronautics Board and involved in this action. The attorney-client privilege is deeply imbedded and is part of the warp and woof of the common law. In order to abrogate it in whole or in part as to any proceeding whatsoever, affirmative legislative action would be required that is free from ambiguity. The very existence of the right of counsel necessitates the attorney-client privilege in order that a client and his attorney may communicate between themselves freely and confidentially.”

Regulatory Policy vs. Rules of Discovery

• In a lawsuit, a party may want to uncover examination records and use them as evidence. • SBAV LP v. Porter Bancorp. Inc ., No. 3:13-CV-00710 (W.D. Ky.) • Diversity-jurisdiction case. • Party seeks records of examinations conducted by FDIC and Federal Reserve. • Mar. 31, 2015 decision: The court defers to Kentucky privilege law – which does not shield bank examinations – so the records are non-privileged. • Nov. 20, 2015: FDIC and Federal Reserve move for reconsideration, arguing that bank examination privilege isn’t just a privilege: It’s a substantive federal policy and therefore should override state law. • Dec. 1, 2015 decision: Based on settlement of case, the court vacates the Mar. 31 decision as moot – does not resolve the motion for reconsideration.