Information Sharing Between Supervisory Agencies Under the Right to Financial Privacy Act of 1978
| Decision Date | 29 October 1982 |
| Docket Number | 82-66 |
| Court | Opinions of the Office of Legal Counsel of the Department of Justice |
| Parties | Information Sharing Between Supervisory Agencies Under the Right to Financial Privacy Act of 1978 |
Larry L. Simms Deputy Assistant Attorney General Office of Legal Counsel.
The Office of the Comptroller of the Currency (OCC) may make available to the Federal Deposit Insurance Corporation (FDIC), in its capacity as a receiver of a failed national bank, OCC examination reports on that bank, notwithstanding the general prohibitions on disclosure in the Right to Financial Privacy Act of 1978. Such disclosure falls within two exceptions in that Act for information exchanges between government "supervisory" agencies, whether or not the FDIC is actually performing a "supervisory" function in its capacity as a receiver. 12 U.S.C. § 3412(d) and (e).
MEMORANDUM OPINION FOR THE CHIEF COUNSEL, COMPTROLLER OF THE CURRENCYThis responds to your request for our opinion regarding the following question: May the Office of the Comptroller of the Currency (OCC) make available to the Federal Deposit Insurance Corporation (FDIC), in its capacity as a receiver of a failed bank, OCC reports of examination of that bank? You indicate that the OCC would like to provide the FDIC with OCC examination reports of banks that the FDIC, in its capacity as receiver of failed national banks, 12 U.S.C. § 1821(c), routinely requests. However, the OCC is concerned that, because such reports contain names and information about bank customers, such disclosure may be prohibited by the Right to Financial Privacy Act of 1978, 12 U.S.C §§ 3401-3422 (Supp. II 1978) (RFPA). We conclude that disclosure of OCC examination reports to the FDIC falls within a recently enacted amendment to the RFPA which excepts information exchanges between supervisory agencies of the Federal Financial Institutions Examination Council from the general prohibitions on information disclosure in that Act. Pub. L. No. 97-320, § 432(a), 96 Stat. 1469, 1527 (1982). We also believe that the exception in the RFPA for information exchanges between supervisory agencies, 12 U.S.C. § 3412(d) would permit disclosure of OCC examination reports to the FDIC.
The Right to Financial Privacy Act of 1978 was enacted in the wake of United States v. Miller, 425 U.S. 435 (1976), which held that a bank customer has no [ 596] protectable Fourth Amendment interest in information about his account in a bank's files.[1] The RFPA created a statutory right of privacy on behalf of a customer of a financial institution in the records of the institution pertaining to him or her. 12 U.S.C. §§ 3403, 3410. The RFPA prohibits financial institutions from providing any governmental authority access to, or copies of, information in the financial records of any customer unless the customer has authorized such disclosure or unless certain legal requirements—such as compliance with an administrative subpoena, search warrant or judicial subpoena—have been met. 12 U.S.C. § 3402. Certain exceptions authorize financial institutions to provide information relevant to possible violations of the law, 12 U.S.C. § 3403(c); to provide copies of records necessary to perfect a security interest, prove a claim in bankruptcy, or otherwise collect on a debt owing to the institution, 12 U.S.C. § 3403(d); and to disclose financial records in response to special enforcement needs, such as the conduct of foreign counter-intelligence activities, and in emergency situations. 12 U.S.C. § 3414.
The RFPA also prohibits the transfer from one government agency to another of financial records originally obtained in compliance with the requirements of the Act, unless the requesting agency certifies that there is reason to believe that the records are relevant to a legitimate law enforcement inquiry. 12 U.S.C. § 3412(a). However, there are two exceptions, important for present purposes, to this prohibition on exchange of information and financial records among government agencies. Section 3412(d) of the RFPA states in relevant part: "Nothing in this chapter prohibits any supervisory agency from exchanging examination reports or other information with another supervisory agency." A recent amendment further clarifies the permissibility of information exchanges among certain supervisory agencies. It provides that:
Notwithstanding section 1101(6) or any other provision of this title, the exchange of financial records or other information with respect to a financial institution among and between the five member supervisory agencies of the Federal Financial Institutions Examination Council is permitted.
Pub. L. No. 97-320, § 432(a) (1982), to be codified at 12 U.S.C. § 3412(e).
Thus, supervisory agencies have a special status under the RFPA. Banks may provide these agencies with otherwise protected information under certain conditions, see 12 U.S.C. § 3413(b), [2] and supervisory agencies may exchange among themselves otherwise protected information concerning financial records. 12 U.S.C. § 3412(d), (e). For purposes of the RFPA generally, supervisory agencies are defined as follows:
12 U.S.C. § 3401(6). But under new 12 U.S.C. § 3412(e), the restrictive definition of "supervisory agency" in § 3401(6)—that is, an agency having "statutory authority to examine the financial condition or business operations of that [particular] institution"—is not applicable. Rather, new subsection (e) permits, without apparent qualification, exchanges of financial records and information between member agencies of the Federal Financial Institutions Examination Council (Council). Both the FDIC and the OCC are member agencies of the Council. 12 U.S.C. § 3302(1).[3]
Your request, in essence, focuses on whether the FDIC can be viewed as a "supervisory agency" as defined in § 3401 (6) and employed in § 3412(d), or as a member agency of the Council for purposes of § 3412(e), when it is acting as a receiver of a closed national bank.
Under the Federal Deposit Insurance Act (FDIA), 12 U.S.C. §§ 1811-1832, as amended by the Deposit Insurance Flexibility Act, Pub. L. No. 97-320, the FDIC has the duty to insure to $100, 000 each deposit made in national banks that are members of the Federal Reserve System. 12 U.S.C. §§ 1811, 1813(m), 1821(a), (f). The FDIC meets its responsibility as insurer from an insurance fund created from assessments paid by the insured banks. 12 U.S.C. §§ 1817, 1821(a). Whenever an insured bank is closed because of its inability to meet the [ 598] demands of its depositors, the FDIC is obligated to make payment of the insured deposits in that bank as soon as possible. 12 U.S.C. § 1821(f). In exercising these duties, the FDIC is acting in its corporate capacity, as insurer of deposits. See First Empire Bank v. FDIC, 572F.2d 1361, 1363-64 (9th Cir.), cert, denied, 439 U.S. 919 (1978).
The FDIC also must accept appointment as receiver of closed state banks if appointment is tendered and authorized by state law, 12 U.S.C. § 1821(e), and whenever the Comptroller of the Currency appoints a receiver for a closed national bank, he must appoint the FDIC. 12U.S.C. § 1821(c). In its capacity as receiver of a closed national bank, the FDIC has the duty to "realize upon the assets of such closed bank . . .; to enforce the individual liability of the stockholders and directors thereof; and to wind up the affairs of such closed bank in conformity with the provisions of law relating to the liquidation of closed national banks, except as herein otherwise provided." 12 U.S.C. § 1821(d). Further, "[w]ith respect to any such closed bank, the Corporation as such receiver shall have all the rights, powers, and privileges now possessed by or hereafter granted by law to a receiver of a national bank or District bank and notwithstanding any other provision of law in the exercise of such rights, powers, and privileges the Corporation shall not be subject to the direction or supervision of the Secretary of the Treasury or the Comptroller of the Currency." Id.
As courts have noted, these various statutory responsibilities often place the FDIC in the position of acting in two capacities with respect to closed national banks: in its corporate capacity, as insurer of deposits, and in its capacity as a receiver. See FDIC v. Lauterbach, 626 F.2d 1327, 1330 n.4 (7th Cir. 1980); FDIC v. Citizens Bank & Trust Co., 592 F.2d 364, 366 (7th Cir.) cert, denied, 444 U.S. 829 (1979); First Empire Bank v. FDIC, 572 U.S. at 1364. For purposes of federal jurisdiction, Congress has discriminated between the FDIC's dual capacity as federal insurer and state receiver by providing that any "suit to which the Corporation is a party in its capacity as receiver of a State bank and which involves only the rights or obligations of...
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