Federal District Court Denies OCC's Motion Seeking Reconsideration of Order Compelling Production of Materials Subject to Bank Exam Privilege

OCC Bank Privilege

On May 23, the U.S. District Court for the Southern District of New York denied the OCC’s motion for reconsideration of an April 2013 order in which the court compelled a bank and the OCC to produce various investigative files and regulatory communications over the OCC’s objection that the bank examination privilege protected such production. Wultz v. Bank of China, No. 11-1266, 2013 WL 2284881 (S.D.N.Y. May 23, 2013). In support of its motion to reconsider, the OCC argued that (i) the court failed to properly weigh long-standing principles; (ii) the decision “will be construed as an erosion of the bank examination privilege that ultimately will undermine the bank supervisory process;” and (iii) the OCC never waived the privilege and appropriately and in good faith relied upon the procedures set forth under its Touhy regulation. The court disagreed and explained that, although the OCC argued that it did not waive its right to assert privilege over the documents, the OCC never affirmatively asserted privilege over any of the specific materials at issue, or even over clearly specified categories of documents. The court also reasoned that the OCC failed to support its positions that the Second Circuit’s approach to Touhy regulations should not apply in this case and that the court failed to properly weigh the risk of a chilling effect in overriding the bank examination privilege, stating that it is “not necessary for every judicial consideration of the chilling effect to be accompanied by a lengthy paean to the virtues of candor in regulatory communications.”