Financial regulators and the banking industry are raising concerns about bipartisan legislation that would expand the public’s access to government documents, according to lawmakers.

Members of Congress have sought to clarify that their proposals to update the Freedom of Information Act (FOIA) would not erode protections that prevent the public from obtaining sensitive banking information that regulators see as part of their supervision of the financial sector.

And while regulators and the banking industry have remained publicly silent, lawmakers are echoing their private warnings. Before the House Oversight Committee approved a reform bill last week, Rep. Carolyn Maloney (D-N.Y.) unsuccessfully attempted to attach a clarifying provision to the legislation.  

{mosads}”The financial regulators are concerned, and I shared their concerns, that this bill will take away their ability to withhold confidential supervisory information,” she said before withdrawing her amendment.

Maloney said she does “not believe this is the intent of the bill” but wanted to put down in writing that the proposal is not meant to “lessen the protections offered” by current law. She negotiated to have her concerns addressed in the committee’s report on the bill.

The regulator and industry concerns do not appear strong enough to stymie reform. Similar FOIA reform bills in the House and Senate have already made it through committee, and both received unanimous approval in their respective chambers last Congress.

The worry surfaced late last year and deals with one of the major provisions of the reform bills that would mandate a “presumption of openness” on the part of federal agencies.

On President Obama’s first day in office, he instructed agencies to adopt a policy that leans toward the public release of documents unless they fall under one of the exemptions or if their release could cause foreseeable harm.

Maloney voiced concerns that the presumption could specifically weaken Exemption 8 of FOIA, which prevents the public from obtaining examination or report material that regulators use during oversight of financial institutions. If that happened, she said, banks might be less candid with regulators, knowing the information could one day become public.

House and Senate advocates have said the worries are unfounded. Rep. Elijah Cummings (D-Md.), one of the sponsors of the House bill, said the legislation would only codify a policy that Obama has already put in place.

Cummings has said concerns have come from the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Federal Trade Commission. No agency would comment publicly on the issue.

The White House has also been silent on the proposals.

“I do know that very late in the last Congress some concerns were raised, but the issues that they had raised, I just don’t understand, because there are already broad protections for some kinds of information they were concerned about,” said Rick Blum, the director of the Sunshine in Government Initiative, who testified in the House last month.  

Outside financial groups have largely declined to speak publicly about their concerns.

One person close to the financial services industry said the “language doesn’t give the industry or regulators the comfort that they currently have.” The person said including clarification in a report is a start but the “first place you look at is the language in the statute.”

The expert, provided anonymity to speak candidly, said the industry is advocating for clarification in the bill rather than pushing wholly against it. The issue has become a larger priority this year, however.  

“People discussed this towards the end of the year, late last year, and it wasn’t a huge fire drill that it’s become now,” the person said.

In the Senate, lawmakers sought to allay similar concerns when they approved their own FOIA reform bill last year, by unanimous consent. The same bill has already been approved this year by the Judiciary Committee.

Rep. Darrell Issa (R-Calif.), a sponsor of the House bill, told The Hill earlier this year that the banking community’s concerns about the Senate bill made his version “less controversial.” But it appears the same worry extends to both proposals.

Inter-chamber squabbles over the House and Senate bills prevented reform from hitting the president’s desk last year. Delays kept the Senate from passing its version until late in the Congress. Sen. Patrick Leahy (D-Vt.), the bill’s sponsor, blamed House leadership for refusing to take up his version, while Issa pressed the Senate to adopt the House version. Advocates expect the differences in the two bills to be resolved in conference.

Last year, the Senate bill’s passage was held up by now-retired Sen. Jay Rockefeller (D-W.Va.), who expressed alternate concerns that the “bill would make it harder for our consumer protection agencies to bring enforcement actions against corporate wrongdoers.” He eventually dropped his hold after clarifying language was added to the bill’s report.

But the financial concerns were also present in the upper chamber. Then-Chairman of the Senate Banking Committee Tim Johnson (D-S.D.), who also is now retired, also said he was “mindful” of the importance of financial regulators to be able to conduct oversight. He conceded, however, that nothing in the bill seemed intended to “limit the scope of the protections.”

Leahy also said another exemption in FOIA — Exemption 4 — prevents the public release of documents that contain trade secrets, which would overlap in protecting financial records. 

Tags Jay Rockefeller Patrick Leahy Tim Johnson

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