Bank Examination Privilege Presents a Moving Target for Counsel

In the current banking environment, where private civil litigation is frequently brought simultaneously with, or very closely following, regulatory investigations and enforcement actions, it is crucial for banks to know whether and how communications with federal and state regulators may be used against them in parallel or subsequent proceedings.

The bank examination privilege exists at both the federal and state levels. Stated broadly, the bank examination privilege is a qualified privilege that protects communications between banks and their examiners in order to preserve absolute candor essential to the effective supervision of banks. It arises out of the practical need for openness and honesty between bank examiners and the banks they regulate, and is intended to protect the integrity of the regulatory process by privileging such communications. Unlike other privileges raised in discovery, which may be asserted by the party responding to the discovery request, the bank examination privilege belongs solely to the bank regulatory agencies. Staying attuned to potentially protected material is key during any litigation that could involve privileged materials.

We recently published an article, “Bank Examination Privilege Presents a Moving Target for Counsel,” in the New York Law Journal. The piece covers the nature of the bank examination privilege generally, who holds and who may invoke the privilege, the scope of the privilege, how to respond to document requests that seek privileged information, and how the privilege has been challenged and defenses to challenge