Current through Reg. 49, No. 38; September 20, 2024
(a) Policy. The
Texas Department of Banking (the department) is committed to the concept of
open state government. As a regulator of financial institutions, however, the
department recognizes the mandate of the legislature to balance the competing
interests of the need of financial institutions for confidentiality regarding
their financial condition and business affairs with the general public's need
for information. The legislature has determined that confidential information,
with limited exceptions, should not be disclosed. See Finance Code, Chapter 31,
Subchapter D, Chapter 181, and §§201.007, 204.102(c), 204.117(d) and
204.205(d). Inappropriate disclosures can result in substantial harm to
financial institutions and to those persons and entities (including other
financial institutions) that have relationships with them. In accordance with
the historical availability of records of financial institutions and the sound
public policy that generally protects them, non-disclosure under this section
protects the stability of such institutions by preventing disclosures that
could adversely impact financial institutions. For example, the department may
criticize a bank in an examination report for a financial weakness that does
not currently threaten the solvency of the bank. If improperly disclosed, the
criticism can lead to adverse impacts such as the possibility of bank "runs,"
short-term liquidity problems, and volatility in costs of funds, which in turn
can exacerbate the problem and cause the failure of the bank. Bank failures
lead to reduced access to credit and greater risk to depositors. Further,
specific loans may be criticized in an examination report, and confidentiality
of the information protects the financial privacy of customers. Finally,
protecting confidential information from disclosure facilitates the free
exchange of information between the financial institution and the regulator,
encourages candor, and promotes regulatory responsiveness and effectiveness.
Information that does not fall within the meaning of confidential information
as defined in this section may be confidential under other definitions and
controlled by other laws, and is not subject to this section.
(b) Definitions. The following words and
terms, when used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1)
Affiliate--A company that directly or indirectly controls, is controlled by, or
is under common control with a bank or other company.
(2) Confidential information--Written and
oral information obtained directly or indirectly by the department relative to
the financial condition or business affairs of a financial institution, an
applicant, or a present, former, or prospective shareholder, participant,
officer, director, manager, affiliate, or service provider of a financial
institution or applicant, whether obtained through application, examination, or
otherwise, and all related files and records of the department, regardless of
the form of the information when obtained or as held by the department or when
the department first obtained it, and whether or not the information is part of
the department's official files or records. The term does not include:
(A) the public portions of call reports of
state banks and public trust companies;
(B) the names of proposed directors of a de
novo financial institution or an entity converting to a state financial
institution;
(C) information
contained in an official document required to be filed with the department in
order to have legal effect (Examples of such documents include, without
limitation, Certificate of Amendment, Certificate of Merger, or Certificate of
Conversion);
(D) information
contained in the portion of an application submitted to the department that has
been designated as public by the applicant, department or a federal agency;
or
(E) information previously
disclosed to the public by the person or entity to which the information
relates.
(3) Financial
institution--As defined in the Finance Code, §
RSA
31.002(a)(25). For purposes
of this section only, the term includes a trust company incorporated under the
Texas Trust Company Act, Finance Code, Chapters 181 et seq, or
a predecessor statute, and a foreign bank branch, agency or representative
office licensed under the Finance Code, Chapter 204 et
seq.
(4) Governmental
agency--Another department of this state, another state, the United States, a
foreign sovereign state, or any related agency or instrumentality.
(5) Court--A court of law or equity or other
adjudicatory tribunal with jurisdiction to issue a subpoena or other legal
process for the production of documents, including a government agency
exercising adjudicatory functions and an alternative dispute resolution
mechanism, voluntary or required, under which a party may compel the production
of documents.
(1)
Disclosures by the department. Confidential information disclosed by the
department pursuant to an exception to disclosure remains the confidential
property of the department. The department may:
(A) disclose confidential information to the
finance commission and other governmental agencies as provided by the Finance
Code, §
RSA
31.302 and §
RSA
31.303;
(B) publish final removal, prohibition, and
cease-and-desist orders and information regarding the existence of a
cease-and-desist order as provided by the Finance Code, §
RSA
35.012;
(C) release employment information as
provided by the Finance Code, §
RSA
31.307;
(D) provide a copy of the regular report of
examination and an order, opinion, or other confidential information to the
financial institution, its service provider, or affiliate for which it was
prepared and to which it relates and correspond with that financial
institution, service provider, or affiliate regarding such
information;
(E) provide a copy of
the regular report of examination of a service provider and an order, opinion,
or other confidential information relating to the service provider to the
financial institution or institutions it services;
(F) forward to a court of proper
jurisdiction, subject to any existing administrative protective order, the
record of an administrative hearing under appeal that contains confidential
information. In the event an administrative protective order does not exist,
the department or another party shall file a motion with the court for a
protective order consistent with the terms of subsection (f)(4) of this section
prior to filing the administrative record. Discretion of the banking
commissioner or finance commission to vacate an administrative protective order
entered under §
RSA
9.22 of this title (relating to Protective
Orders; Motions to Compel) ceases at the time the appeal is filed;
(G) provide complete copies of documents
previously submitted to the department by a financial institution to the same
financial institution or the successor financial institution upon request;
and
(H) provide certificates and
certified copies upon request. The cost for a formal certificate issued by the
department shall be $20.00 plus $1.00 per page for certified copies of pages
attached to the certificate.
(2) Further disclosure by a governmental
agency, financial institution, service provider or affiliate. Except for
disclosures pursuant to subsection (f) of this section, confidential
information released to a financial institution, its service provider, or
affiliate may be disclosed by the recipient only to a person officially
connected to the recipient as provided by subsection (c) of this section and,
if authorized under the terms of a confidentiality agreement between the
department and another governmental agency, to that governmental agency in the
discharge of its official duties. Disclosures to a person designated by board
resolution as officially connected to the financial institution, service
provider, or affiliate must be made pursuant to a confidentiality agreement
between the financial institution, service provider, or affiliate and the
recipient. Confidential information released to a governmental agency may be
disclosed by the agency only to a person officially connected to the agency as
provided by subsection (c) of this section or to another governmental agency to
the extent authorized by this section or other law, and must be in accordance
with the terms of this section and a confidentiality agreement with or letter
of instructions from the department.
(e) Exceptions to non-disclosure.
(1) Disclosures by the department.
Confidential information disclosed by the department pursuant to an exception
to disclosure remains the confidential property of the department. The
department may:
(A) disclose confidential
information to the finance commission and other governmental agencies as
provided by the Finance Code, §
RSA
31.302 and §
RSA
31.303;
(B) publish final removal, prohibition, and
cease-and-desist orders and information regarding the existence of a
cease-and-desist order as provided by the Finance Code, §
RSA
35.012;
(C) release employment information as
provided by the Finance Code, §
RSA
31.307;
(D) provide a copy of the regular report of
examination and an order, opinion, or other confidential information to the
financial institution, its service provider, or affiliate for which it was
prepared and to which it relates and correspond with that financial
institution, service provider, or affiliate regarding such
information;
(E) provide a copy of
the regular report of examination of a service provider and an order, opinion,
or other confidential information relating to the service provider to the
financial institution or institutions it services;
(F) forward to a court of proper
jurisdiction, subject to any existing administrative protective order, the
record of an administrative hearing under appeal that contains confidential
information. In the event an administrative protective order does not exist,
the department or another party shall file a motion with the court for a
protective order consistent with the terms of subsection (f)(4) of this section
prior to filing the administrative record. Discretion of the banking
commissioner or finance commission to vacate an administrative protective order
entered under §
RSA
9.22 of this title (relating to Protective
Orders; Motions to Compel) ceases at the time the appeal is filed;
(G) provide complete copies of documents
previously submitted to the department by a financial institution to the same
financial institution or the successor financial institution upon request;
and
(H) provide certificates and
certified copies upon request. The cost for a formal certificate issued by the
department shall be $20.00 plus $1.00 per page for certified copies of pages
attached to the certificate.
(2) Further disclosure by a governmental
agency, financial institution, service provider or affiliate. Except for
disclosures pursuant to subsection (f) of this section, confidential
information released to a financial institution, its service provider, or
affiliate may be disclosed by the recipient only to a person officially
connected to the recipient as provided by subsection (c) of this section and,
if authorized under the terms of a confidentiality agreement between the
department and another governmental agency, to that governmental agency in the
discharge of its official duties. Disclosures to a person designated by board
resolution as officially connected to the financial institution, service
provider, or affiliate must be made pursuant to a confidentiality agreement
between the financial institution, service provider, or affiliate and the
recipient. Confidential information released to a governmental agency may be
disclosed by the agency only to a person officially connected to the agency as
provided by subsection (c) of this section or to another governmental agency to
the extent authorized by this section or other law, and must be in accordance
with the terms of this section and a confidentiality agreement with or letter
of instructions from the department.
(3) Disclosures of certain information.
(A) Statistical data. Confidential
information consisting solely of statistical data may be disclosed, providing
its release does not directly or indirectly disclose the identity of an
individual or financial institution related to the data.
(B) Records of a failed financial
institution. Subject to the sole discretion of the banking commissioner under
this subparagraph, the department may release confidential information in or
related to the records of a failed financial institution. Release may not occur
under this subparagraph earlier than three years after the date such financial
institution failed. Information subject to release must pertain only to the
condition of the financial institution and cannot include confidential customer
information, absent customer consent, or information made confidential by laws
other than the Finance Code, Title 3, Subtitle A, or this section. Pursuant to
Finance Code, §
RSA
36.224 and §
RSA
186.224, records of failed financial
institutions are not government records and are not subject to public
information requests under Texas Government Code, Chapter 552.
(C) Records of another governmental agency.
Information the department has obtained from a federal or state governmental
agency that is confidential under federal or state law or by agreement with the
other agency is not considered part of the department's records. The department
may not release such information unless the request for release is submitted
with a certification from the appropriate state or federal authority that the
information is subject to release under the laws of that
jurisdiction.
(f) Discovery of confidential information
from a governmental agency, financial institution, service provider, or
affiliate.
(1) General rule. A governmental
agency, financial institution, service provider, or affiliate that receives a
subpoena or other legal process in any proceeding for the release of
confidential information shall promptly notify the department of the request,
provide the department with a copy of the process and of the requested
documents or information, and object by written motion or other means available
under applicable rules of procedure. Notice and documents should be sent to the
Texas Department of Banking at 2601 North Lamar Boulevard, Austin, Texas,
78705-4294, to the attention of the General Counsel, and should be labeled
"Request for Release of Confidential Information under 7 TAC § 3.111."
Prior to the release of confidential information, such government agency,
financial institution, service provider, or affiliate also must file and obtain
a ruling on a motion for a protective order and in camera inspection in
accordance with this subsection. Confidential information may be released only
pursuant to a protective order in a form consistent with that set out in this
section and only if a court with jurisdiction has found that:
(A) the party seeking the information has a
substantial need for the information;
(B) the information is directly relevant to
the legal dispute in issue; and
(C)
the party seeking the information is unable without undue hardship to obtain
its substantial equivalent by other means.
(2) Discretionary filings by department. On
receipt of notice under subsection (f)(1) of this section, the department may
take action as may be appropriate to protect confidential information. The
department has standing to intervene in a suit or administrative hearing for
the purpose of filing a motion for protective order and in camera inspection in
accordance with this subsection.
(3) Motion for protective order and in camera
inspection. The movant shall ask the court to enter a protective order in
accordance with this subsection regarding the release of confidential
information. If necessary to resolve a dispute regarding the confidential
status or direct relevance of any information sought to be released, the party
seeking the protective order shall move for in camera inspection of the
pertinent information. Until subject to a protective order, confidential
information may not be released, and the party seeking a protective order shall
request the court officer to deny discovery of such confidential information.
The party seeking the protective order must comply with the court's applicable
rules of procedure.
(4) Protective
order. A protective order obtained pursuant to the terms of this subsection
must:
(A) specifically bind each party to the
litigation, including one who becomes a party to the suit after the protective
order is entered, each attorney of record, and each person who becomes privy to
the confidential information as a result of its disclosure under the terms of
the protective order;
(B) describe
in general terms the confidential information to be produced;
(C) state substantially the following in the
body of the protective order:
(i) absent
court order to the contrary, only the court reporter and attorneys of record in
the cause may copy confidential information produced under the protective order
in whole or part;
(ii) the
attorneys of record are custodians responsible for all originals and copies of
confidential information produced under the protective order and must insure
that disclosure is limited to those persons specified in the protective
order;
(iii) confidential
information subject to the protective order and all information derived
therefrom may be used only for the purpose of the trial, appeal, or other
proceedings in the case in which it is produced;
(iv) confidential information to be filed or
included in a filing in the case must be filed with the clerk separately in a
sealed envelope bearing suitable identification, and is available only to the
court and to those persons authorized by the order to receive confidential
information, and all originals and copies made of such documents and records
must be kept under seal and disclosed only in accordance with the terms of the
protective order;
(v) confidential
information produced under to the protective order may be disclosed only to the
following persons and only after counsel has explained the terms of the order
to the person who will receive the information and provided that person with a
copy of the order:
(I) to a party and to an
officer, employee, or representative of a party, to a party's attorneys
(including other members and associates of the respective law firms and
contract attorneys in connection with work on the case) and, to the extent an
attorney of record in good faith determines disclosure is necessary or
appropriate for the conduct of the litigation, legal assistants, office clerks
and secretaries working under that attorney's supervision;
(II) to a witness or potential witness in the
case;
(III) to an outside expert
retained for consultation or for testimony, provided the expert agrees to be
bound by the terms of the protective order and the party employing the expert
agrees to be responsible for the compliance of its expert with this
confidentiality obligation; and
(IV) to the court or to an appellate officer
or body with jurisdiction of an appeal in the case;
(vi) at the request of the department or a
party, only the court, the parties and their attorneys, and other persons the
court reasonably determines should be present may attend the live testimony of
a witness or discussions or oral arguments before the court that may include
confidential information or relate to such confidential information. The
parties shall request the court to instruct all persons present at such
testimony, discussions, or arguments that release of confidential information
is strictly forbidden;
(vii) a
transcript, including a deposition transcript, that may include confidential
information subject to non-disclosure is subject to the protective order. The
party requesting the testimony of a current or former department officer,
employee, or agent shall, at its expense, furnish the department a copy of the
transcript of the testimony once it has been transcribed.
(viii) upon ultimate conclusion of the case
by final judgment and the expiration of time to appeal, or by settlement or
otherwise, counsel for each party shall return to the party that produced the
confidential information all copies of every document subject to the protective
order and for which the counsel is custodian; and
(ix) production of documents subject to the
protective order does not waive a claim of privilege or right to withhold the
documents from a person not subject to the protective order.
(D) Clauses (i), (ii), and (v) -
(vii) of subparagraph (C) of this paragraph are subject to modification by the
court for good cause before the conclusion of the proceeding, upon notice and
opportunity to appear to the department.
