| (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, §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.
(c) Authority to receive, hold or disclose confidential
information. Authority to disclose confidential information to an
individual, business, or governmental agency under this section constitutes
authority to disclose it to the appropriate person officially connected
to such individual, business, or governmental agency that has a need
to know the information in connection with the discharge of official
responsibilities and authority for the person who is officially connected
to such individual, business, or governmental agency to receive such
information. A person officially connected to a financial institution
includes its holding company, officer, director, manager, attorney,
auditor, independent auditor, employee, and a person reasonably designated
as officially connected with the financial institution by resolution
duly adopted by the board of directors of the financial institution.
A financial institution or its service provider, or affiliate may
disclose confidential information, other than as specifically mentioned,
to a non-employee, such as its agent, bonding company, or a prospective
acquirer, only pursuant to board resolution designating the person
or entity as officially connected with the financial institution,
affiliate, or service provider. The financial institution, affiliate,
or service provider may not disclose confidential information to a
shareholder or participant that is specifically denied to such person
under the Finance Code, §31.308. Only a person to whom confidential
information has been released pursuant to lawful authority may disclose
that information to another, and all such further disclosures must
be in accordance with the Finance Code and this section.
(d) Disclosure prohibited.
(1) Pursuant to the Finance Code, §31.301, and Stewart v. McCain, 575 S.W.2d 509 (Tex.
1978), the department possesses an absolute privilege against disclosure
of confidential information held by the department. Except as provided
by the Finance Code, Title 3, Subtitle A, and rules adopted under
the Finance Code, the finance commission, a member of the finance
commission, the banking commissioner, or an employee or agent of the
department may not directly or indirectly disclose confidential information,
whether voluntarily or pursuant to subpoena or other legal process.
Confidential information is discoverable from the department under
this section only pursuant to a protective order under subsection
(f) of this section in a case in which the department is a party other
than as intervenor under this section. Pursuant to the Finance Code, §31.306,
and notwithstanding any other provision of this section authorizing
the release of confidential information, the banking commissioner
may refuse to release information or records in the custody of the
department if, in the opinion of the banking commissioner, release
of the information or records might jeopardize an ongoing investigation
by the department or other governmental agency of potentially unlawful
activities.
(2) Except as provided by the Finance Code, Title 3,
Subtitle A, and this section, a financial institution, its service
provider, or its affiliate may not disclose confidential information
received from the department. Confidential information includes an
examination report of, correspondence with, and formal and informal
actions of the department taken against the financial institution,
service provider, or affiliate.
(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, §31.302 and §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, §35.012;
(C) release employment information as provided by the
Finance Code, §31.307;
Cont'd... |
