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Free Minds & Free Markets

The Consumer Financial Protection Bureau Wants to Weaken Attorney-Client Privilege

The federal agency is attacking the Sixth Amendment right to counsel.

The Consumer Financial Protection Bureau (CFPB) has been in the spotlight lately, with courts and congressional Republicans zeroing in on the agency's unconstitutional structure that leaves its head—currently Richard Cordray a likely future Democratic candidate for Ohio governor—in possession of vast powers, accountable to no one. Sen. Ben Sasse has dubbed Cordray "King Richard," and President Donald Trump has been threatening to fire him.

It's just the latest scandal for the CFPB, which a few years back got itself in hot water for collecting reams of consumer data, undercutting privacy rights while putting lots of potentially sensitive personal information at risk in the event of a hack, and has been in the firing line nearly continuously since its inception for spending lots of taxpayer cash on everything from high salaries to luxurious overhauls of its headquarters.

Now the CFPB may be headed back into big doo-doo, thanks to a rule it is pursuing that would allow it to share communication between an entity it regulates and that entity's lawyer with a slew of other government regulators—potentially even with foreign governments.

The rule would also relieve the CFPB from any requirement that it inform an entity it regulates that it's sharing such information with Congress, and bar entities it regulates from sharing any correspondence related to CFPB enforcement without the agency giving a proverbial thumbs up. It's obviously a big boon to a big government regulator, written by and for big government regulators. Unsurprisingly, it's also being decried as a straight-up erosion of attorney-client privilege, and something that jeopardizes a core, constitutionally protected civil liberty.

In comments on the proposed rule, the American Bar Association—an entity that more often than not seems to side on policy with Democrats like the ones who authored Dodd-Frank and act as protectors of the CFPB—writes that, "each such disclosure of privileged information by the CFPB to a non-federal agency or Congress could endanger the privileged status of the information." In other words, every time the CFPB discloses privileged information, they're making sure that legally, it's no longer confidential. Or, you have the right to a lawyer, but what you and your lawyer say to each other is not really private and can totally be used against you.

This is so because under federal case law, if privileged communication is shared with any third party, even a federal agency, its confidentiality evaporates; the only instances in which this is not so are when it's shared with a relatively narrow set of third parties, explicitly listed in actual legislation. The ABA argues that CFPB's attempted erosion of attorney-client privilege matters because preservation of it underpins "fundamental rights to effective counsel." So, in this rule, we have another example of itty-bitty, little-discussed, not-very-interesting regulation that, if put on the books, will put more civil liberties on the chopping block—in this case, one protected by the Sixth Amendment.

Clearly, the civil liberties immediately at risk here are those of financial service providers themselves—not you or me (unless, say, you own an entity the CFPB regulates or is trying to regulate). The problem, though—as ever—is when you start eroding a right for one arguably undesirable person, you tend to end up eroding it for all people. Once you set a legal precedent, it has a tendency to stick around, and be invoked in instances in which the people who conjured it up in the first place never predicted. Don't believe that? Just ask President Obama, whose expansion of executive authority is now being used to undo his signature health-care law.

For this reason, the ABA is asking the CFPB to rewrite its rule and narrow it. House Republicans, meanwhile, are objecting to pursuit of the rule full-stop, demanding in a letter that CFPB Director Cordray "provide the Committee with the statutory authority on which the Bureau relies… and please further indicate what legal safeguards exist to prevent the Bureau from abusing the power it proposes to grant itself in this proposal."

That information would, of course, be useful to have, but is hardly the point. Even if the CFPB had the authority to do this under Dodd-Frank, and even if it had some guidelines in place to prevent its use of the rule from getting out of hand, curtailing attorney-client privilege is a bad idea, and one that has implications in a slew of other areas not pertaining to nasty banker types.

Democrats, especially Sen. Elizabeth Warren— who thought up the CFPB— continue to go to the mat defending the agency, but it's becoming increasingly apparent that for as much as the CFPB has a certain populist appeal and likes to position itself as consistently sticking up for the little guy against big, gross Wall Street institutions, it may not be fully thinking through the effects of its actions, or their implications for maintaining a system of strong civil liberties protected by the Constitution. Worse, the CFPB may just take the view that civil liberties are unimportant things that can and should be dispensed with so that progressive goals of targeting the financial services sector can be met. Either way, this kind of small-ball, unsexy regulation is exactly the kind of thing that should be watched by liberty lovers for its precedent value alone, and something that demonstrates why scrutiny of supposedly well-intentioned government regulators remains important.

Liz Mair is a libertarian Republican political consultant. As the founder, president and owner of Mair Strategies LLC, she advises clients on an array of technology, tax, health care, and financial services policy matters.

Liz Mair is a libertarian Republican political consultant. As the founder, president, and owner of Mair Strategies LLC, she advises clients on an array of technology, tax, health care, and financial services policy matters.

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  • Brochettaward||

    Seems like as good a thread as any to point out that one of the most prescient things Trump has ever stated was when he compared the actions of America's intelligence agencies to a police state. It goes beyond them, however. If anyone bothered to compile a master list of all the indicators, the argument would be pretty damn compelling.

  • Not a True MJG||

    It was compelling long before Trump was inconvenienced.

  • Brochettaward||

    It was. And Trump just brushed the surface because he felt personally wronged. He obviously did not speak out of any principle or particular insight. But he has a way on on occasion of stumbling upon right answers. Democrat or Republican, the police state in this country marches on.

  • Lee picked the wrong week....||

    it may not be fully thinking through the effects of its actions, or their implications for maintaining a system of strong civil liberties protected by the Constitution

    It doesn't answer to anyone, so what did they expect?

  • timbo||

    Elizabeth warren is a twat in need of chipp'n.

  • Don'tTreadOnMeChipper||

    So you're saying you wood?

  • Some Engineer||

    If I wood
    Wood you?

  • ||

    "The Consumer Financial Protection Bureau"

    Look, baggers, why do you think it's called the consumer financial protection agency? Well, because it's there to PROTECT you ungrateful knuckle draggers! You aren't able to make informed decisions on your own about what you're consuming. That's why we need this agency, plus the DEA and the ... well, a lot of alphabet soup agencies that need to protect you, mostly... from you. In order to protect you, they need vast sweeping powers, because that sounds impressive and well, just because. Now with all those vast sweeping powers, this gives them the means to protect you. And if it seems like they're violating your rights, well, it's because they have to primarily protect you against you. And the children. You don't understand these things and that's why we're here to protect you. Now go back to your huts, peasants, and shut up so that the kings men can protect you.

  • Scarecrow Repair & Chippering||

    Two possibilities:

    * It's a fig leaf to hide the fact they already get this info from the NSA

    * This is a back door to giving the NSA the info, because they are so incompetent they CAN'T get it now

    Incompetence before malice, but jeez, I really don't know which worries me more.

  • american socialist||

    Mad props to reason today. Some trump articles are ok but it gets old when it is all trump whereas today is for most part non trump

    These are good quality topics imo on a range of things

  • Migrant Log Chipper||

    Lieawatha does war dance....

  • __Warren__||

    Goddamn! People named Warren are just fucking things up all over!

  • Marcus Aurelius||

    +1 Empire Records

  • __Warren__||

    Goddamn! People named Warren are just fucking things up all over!

  • __Warren__||

    Goddamn! People named Warren are just fucking things up all over!

  • __Warren__||

    Goddamn! People named Warren are just fucking things up all over!

  • __Warren__||

    Goddamn! People named Warren are just fucking things up all over!

  • __Warren__||

    Goddamn! People named Warren are just fucking things up all over!

  • XenoZooValentine||

    An entire warren full of squirrels agrees!

  • XenoZooValentine||

    So now the Sixth Amendment needs to go too, eh?

    At this point I'm just waiting for activists to claim that the Third Amendment is a dangerous relic of a bygone age, and needs to be repealed whittled away in court. The Founders clearly couldn't have imagined modern housing technology, and it's a loophole that lets rich people and corporations avoid quartering their fair share of the troops.

  • DiegoF||

    Is Liz Mair a libertarian Republican political consultant? As the founder, president and owner of Mair Strategies LLC, does she advise clients on an array of technology, tax, health care, and financial services policy matters?

  • Pompey:何 Class Mothersmucker||

    I'm not convinced.

  • albo||

    CFPC should be renamed The Revenge of Grandma Warren. I bet it's stuffed with Naderites who bicycle to work and eat yogurt and wheat bread for lunch.

  • SimonD||

    I don't know about the wheat bread, but I'd guess that they drive taxpayer-puchased vehicles that cost more than my house (while lecturing us about our greed). That seems to be S.O.P. for leftists with power.

  • Johnny B||

    I don't know about the whole agency, but the one guy I know who works there came to visit a few years back and after a few days of the wife and kid and he at the house, he and I and a couple of other college friends went for a multi-day hike in the Rockies. It was then that his girlfriend showed up about a mile down the trail. They, guy and girlfriend, were both in DOJ at that time. Two agencies that need major purges in my view. Lots of fun looking the wife and kid in the eye when we got back. Good thing the college buddies were still potheads. He likes working at CFPB because the limits on government pay do not apply. Plus he gets to abuse all that consumer data! Please burn that place to the ground.

  • Number 2||

    Do not kid yourself. Regulators from many agencies have had their aim set on attorney-client privilege for quite some time. Agencies have attempted to prosecute attorneys who do not rat on their clients, to compel regulated entities to waive attorney-client privilege, and to have undercover "whistleblowers" sit in on meetings with attorneys at which confidential car strategies are discussed so that they can report the discussions back to the government.

  • Number 2||

    case strategies, not car strategies

  • MarkLastname||

    ABA is mad now that they're getting fucked by regulations rather than doing the fuckkmg.

  • Diane Merriam||

    ^YES^

  • BYODB||


    "it may not be fully thinking through the effects of its actions, or their implications for maintaining a system of strong civil liberties protected by the Constitution. Worse, the CFPB may just take the view that civil liberties are unimportant things that can and should be dispensed with so that progressive goals of targeting the financial services sector can be met."


    Duh, McFly. You're giving them the benefit of a doubt way too much. Foreseeable consequences are not unintended.


    And yes, Progressives do believe that civil liberties are unimportant things that can and should be dispensed with. They're in the way of their agenda, plain and simple.

  • AD-RtR/OS!||

    Just another reason for Congress to dis-establish this un-Constitutional bureau by repealing - in its entirety - Frank-N-Dodd.

  • Rockabilly||

    Abolish the CFPB = problem solved !!!

  • retiredfire||

    Repeal Dodd-Frank - lots of problems solved.

  • croaker||

  • Snort||

    Wow. Where to start? Your prejudices are showing. At least some of them. In the first paragraph you said the CFPB "in possession of vast powers, accountable to no one.", and quoted someone calling Cordray as "King Richard." Everyone knows a "king" and someone "accountable to no one" can't be fired. Overthrown, yes. But fired, no. In the second paragraph I'm not aware of the "scandal" you refer to, but take out the word "CFPB" and substitute "FBI", "ATF", "Homeland Security", "Congress" or many other local, state or federal agencies. Or if you change the phrase from taxes to fees much of your accusations could be applied to Yahoo, Microsoft, Facebook, Your bank, etc. There is a debate tactic that I have forgotten the name of. It involves overloading your opponent with real and imagined data. Your opponent simply can't counter a fraction of your spiel. I's seen this used and it can be devastating. If I remember correctly it is named after it's (republican) creator.

  • ||

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