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Mr. LEVIN addressed Chair.
[Page: S4865] GPO's PDF
The PRESIDING OFFICER. The Senator from Michigan.
Mr. LEVIN. Mr. President, I have an amendment which I am likely to offer, but I need to engage in some floor discussion with the managers prior to making that decision. I think it may take about a half an hour to an hour to go through a discussion with the managers on this subject.
It is a very important subject. It has to do with whether or not the SEC is going to be able to regulate the purchase and sale of stock when they are done by banks. The SEC sent me a letter yesterday strongly objecting to language in this bill, and what they are pointing out is that the language in the committee report is different from the language in the bill.
I want to talk to the managers about an amendment which would incorporate in the bill what the committee report says is the intent of the bill. It is possible that this will be accepted because this is committee report language which I am trying to get into the bill, but I do not know until after we go through the discussion process on the floor. I just want to alert colleagues that could take perhaps a half an hour to an hour.
The PRESIDING OFFICER. The Senator from Minnesota.
Mr. WELLSTONE. Mr. President, just on the order of business, I have an amendment I was going to offer with Senator HARKIN. I know colleagues want to leave. I need to talk with Senator HARKIN and make a decision as to what we want to do here, if the manager can give us a couple of minutes.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. Mr. President, I have spoken to both managers of the bill. Senator DORGAN and I have an amendment. It is simple in nature. I think it is something that should be accepted. It is something that could be reviewed in conference. It would require an independent audit of the Federal Reserve Board. Otherwise, we will offer that amendment. It will not take long.
Mr. GRAMM. If the Senator will give us that amendment and let us look at it, we might be able to include it in the managers' package.
Mr. SARBANES. I suggest to the chairman, maybe if we take about 5 or 10 minutes to engage in a discussion with the people who have these amendments, we can find a way to perhaps accept some of them and go to conference with them at least and deal with the others, and then we can still move to final passage this evening and complete this legislation, which I think is highly desirable.
Mr. GRAMM. I agree with that. The thing to do is to plow ahead. Is the distinguished Senator from Nevada going to withdraw the amendment?
Mr. BRYAN. Yes.
Mr. GRAMM. Can I suggest, again, the Senator offer the amendment and speak for a couple of minutes and withdraw it, and then after the vote, if he wants to speak longer on it, he can. Will that work? If not, go ahead and speak.
Mr. BRYAN. Mr. President, I will be willing to do that. Can I have a little flexibility, if you are still trying to work things out. I am not trying to delay this.
Mr. GRAMM. Let's just start.
The PRESIDING OFFICER. The Senator from Nevada.
AMENDMENT NO. 316
Mr. BRYAN. Procedurally, I ask unanimous consent to lay aside the pending amendment, and I ask that an amendment dealing with personal privacy be sent to the desk for immediate consideration.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Nevada [Mr. BRYAN] proposes an amendment numbered 316.
Mr. BRYAN. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 150, after line 21, add the following:
SEC. 701. SHORT TITLE.
This title may be cited as the ``Financial Information Privacy Act of 1999''.
SEC. 702. DEFINITIONS.
In this title--
(1) the term ``covered person'' means a person that is subject to the jurisdiction of any of the Federal financial regulatory authorities; and
(2) the term ``Federal financial regulatory authorities'' means--
(A) each of the Federal banking agencies, as that term is defined in section 3(z) of the Federal Deposit Insurance Act; and
(B) the Securities and Exchange Commission.
SEC. 703. PRIVACY OF CONFIDENTIAL CUSTOMER INFORMATION .
(a) RULEMAKING.--The Federal financial regulatory authorities shall jointly issue final rules to protect the privacy of confidential customer information relating to the customers of covered persons, not later than 270 days after the date of enactment of this Act (and shall issue a notice of proposed rulemaking not later than 150 days after the date of enactment of this Act), which rules shall--
(1) define the term ``confidential customer information'' to be personally identifiable data that includes transactions, balances, maturity dates, payouts, and payout dates, of--
(A) deposit and trust accounts;
(B) certificates of deposit;
(C) securities holdings; and
(D) insurance policies;
(2) require that a covered person may not disclose or share any confidential customer information to or with any affiliate or agent of that covered person if the customer to whom the information relates has provided written notice, as described in paragraphs (4) and (5), to the covered person prohibiting such disclosure or sharing--
(A) with respect to an individual that became a customer on or after the effective date of such rules, at the time at which the business relationship between the customer and the covered person is initiated and at least annually thereafter; and
(B) with respect to an individual that was a customer before the effective date of such rules, at such time thereafter that provides a reasonable and informed opportunity to the customer to prohibit such disclosure or sharing and at least annually thereafter;
(3) require that a covered person may not disclose or share any confidential customer information to or with any person that is not an affiliate or agent of that covered person unless the covered person has first--
(A) given written notice to the customer to whom the information relates, as described in paragraphs (4) and (5); and
(B) obtained the informed written or electronic consent of that customer for such disclosures or sharing;
(4) require that the covered person provide notices and consent acknowledgments to customers, as required by this section, in separate and easily identifiable and distinguishable form;
(5) require that the covered person provide notice as required by this section to the customer to whom the information relates that describes what specific types of information would be disclosed or shared, and under what general circumstances, to what specific types of businesses or persons, and for what specific types of purposes such information could be disclosed or shared;
(6) require that the customer to whom the information relates be provided with access to the confidential customer information that could be disclosed or shared so that the information may be reviewed for accuracy and corrected or supplemented;
(7) require that, before a covered person may use any confidential customer information provided by a third party that engages, directly or indirectly, in activities that are financial in nature, as determined by the Federal financial regulatory authorities, the covered person shall take reasonable steps to assure that procedures that are substantially similar to those described in paragraphs (2) through (6) have been followed by the provider of the information (or an affiliate or agent of that provider); and
(8) establish a means of examination for compliance and enforcement of such rules and resolving consumer complaints.
(b) LIMITATION.--The rules prescribed pursuant to subsection (a) may not prohibit the release of confidential customer information --
(1) that is essential to processing a specific financial transaction that the customer to whom the information relates has authorized;
(2) to a governmental, regulatory, or self-regulatory authority having jurisdiction over the covered financial entity for examination, compliance, or other authorized purposes;
(3) to a court of competent jurisdiction;
(4) to a consumer reporting agency, as defined in section 603 of the Fair Credit Reporting Act for inclusion in a consumer report that may be released to a third party only for a purpose permissible under section 604 of that Act; or
(5) that is not personally identifiable.
(c) CONSTRUCTION.--Nothing in this section or the rules prescribed under this section shall be construed to amend or alter any provision of the Fair Credit Reporting Act.
Mr. BRYAN. I thank the Chair.
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Mr. President, earlier today, the Senate adopted an amendment offered by the distinguished chairman of the Banking Committee dealing with the fraudulent procurement of personal information by information brokers. Last Congress, Senator D'Amato and I offered an identical provision, and we were successful in incorporating that in last year's financial modernization bill, H.R. 10.
Unfortunately, that measure died along with H.R. 10 which was filibustered at the end of the last session. I commend the Senator from Texas. The antifraud provision is a good first step, but as Senator SARBANES articulated earlier today, it is in no way a substitute for meaningful privacy protections.
The Gramm amendment deals with a small, but pernicious, group of information brokers that obtain personal information under false pretenses. This practice should be shut down. In fact, the Federal Trade Commission recently brought action against such practices.
While thousands of Americans are harmed by fraudulent information brokers, each and every American who has a bank account, stock portfolio or an insurance policy is subject to a massive invasion of his or her personal privacy that cries out for legislative remedy.
I applaud the fact that the chairman has indicated we are going to hold a series of hearings.
I applaud the chairman's promise to hold a series of hearings on the financial privacy issue. Many of us who worked on the Community Reinvestment Act would have hoped we might have had similar opportunities before moving forward with the CRA changes in this bill.
While the chairman's amendment and his hearings are good first steps, I encourage us to take one more step that Senator SARBANES and Senator DODD and I have been urging for some time.
My amendment is quite simple. What we are talking about is financial privacy . I want to make it very clear that I am a strong supporter of the restructuring bill that is before us, the financial modernization. I freely acknowledge and recognize that we need a regulatory framework which comports with the realities of the marketplace today.
So my purpose in offering this amendment is in no way to denigrate the need to make the kind of changes which essentially are outlined in S. 900, or a part of H.R. 10 in the previous session. But I think my colleagues and the American people would be absolutely shocked if they knew how little privacy they have in their personal financial information with the very people who are going to be players in this financial reorganization--banks, security brokerages, and insurance.
Here is what the American people have to say on the issue of privacy . When asked recently: ``Would you mind if a company
you did business with sold information about you to another company?'' Ninety-two percent said yes, they would object to it. The source of that information is the AARP.
Let me cite an illustration of precisely what does occur and will continue to occur. This is a financial transaction, I say to my colleagues, that occurred at a bank. A lady came in and deposited $109,451.59. At this bank, teller No. 12 made the following notation: ``She came in today,'' referring to the depositor, ``and wasn't sure what she would do with her money.'' That is the bank teller.
This bank has a relationship with a brokerage house. Here is what the teller then did. The teller then contacts ``David''--David is the individual with the brokerage house--and says, ``See what you can do! Thank you.''
So in effect the privacy of this individual's personal bank account is compromised, as the bank teller then notifies the brokerage house: ``You'd better get ahold of this lady. She has $109,000. She doesn't know what she wants to do with it. You contact her.''
This is a real-life situation. Under the current law--under the current law--your information with respect to your insurance accounts may be freely sold to a third party, or maybe transferred to an affiliate under the proposed arrangements that are contemplated in this bill. Your bank account information can be sold to a third party--a total stranger to you and to your financial transaction.
So you have a situation in which all of a sudden you have a certificate of deposit that is coming due next month, and you start to get a stream of information from vendors who are marketing financial services and saying, ``Mrs. Smith,'' ``Mr. Jones, I know your certificate of deposit is due next month. Let me show you what our financial package can provide for you.'' And you are saying, ``How does this outfit know that I've got a certificate of deposit that is maturing next month?'' And the answer is, that information can be sold to a third party, and that information is valuable to a particular vendor of services.
So the amendment that we propose does two things: No. 1--and I do not see how you can argue against this proposition--
The PRESIDING OFFICER. The Senate is not in order. If conversations do not relate to the bill at hand, would you please take them into the other room. The Senator deserves consideration. Would conversations near the Senator please cease.
Mr. BRYAN. I thank the Presiding Officer.
The point that I was making is that your financial information with respect to insurance brokerage accounts and bank accounts is not protected under the present law. That information can be sold or marketed to a total stranger. An outfit, for example, that may be selling penny stocks all of a sudden contacts you and says, ``Look, I know you've got a certificate of deposit or bank account with a sufficient balance involved.''
So what we are proposing in this amendment is something very hard to argue against. We are saying that with respect to these financial organizations--banking, insurance and brokerage--that they cannot sell to a total stranger, a third party, without your consent. What is wrong with that?
So rather than being able to sell to any vendor your very personal and private information --your insurance coverages,
whatever information might be available about any medical condition that you might have, your brokerage account, your bank account--cannot be sold to a third party without your prior consent. I suspect if you ask the American people--Democrat, Republican, independent, whether they are to the right of center or to the left of center or in between--you would get almost a unanimous vote that would say, ``That is what I want as a protection for my privacy .''
I understand that in this modern consolidation of financial services the thrust of this bill is going to permit banks and insurance and brokerage to be involved in affiliated relationships. I understand that. So we are told, ``Do not, Senator, do anything that would impair or compromise the synergy of the marketplace. Don't do that.''
Well, this is what we propose with respect to those affiliate arrangements. This would not be a total stranger or a third party. If they are going to transfer and make available that information , they need to notify you and give you the opportunity to opt out. They do not have to get your prior consent, but they have to give you the right to opt out.
That concept is recognized in the law. Many of you will recall that I took the lead some years back in securing amendments to the Fair Credit Reporting Act. And we said there, with respect to information that is collected, with respect to your credit history, that before that information can be made available for marketers and others, they need to notify you where that information came from and that you had the right, after receiving a solicitation, to say, ``Look, no more. Take me off the list'' in effect the right to opt out.
So that is what we are proposing in this amendment--An absolute requirement that if the information is made available to a total stranger, a third party, that has no affiliate relationship, a vendor of any number of financial services, they must obtain your prior consent; that if the information , the financial information , is to be transferred from one of their affiliates, they need to give you the opportunity to opt out if you choose to avail yourself of that option.
Now, I am hard pressed to understand why anybody would object to that. I think any one of us would be somewhat surprised to know that our bank accounts, our insurance, and our brokerage accounts
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So this is a provision that I think needs attention. I must say that the ranking member has taken a lead on this. He has been a strong advocate, as has the senior Senator from Connecticut. I know he had a question or two to which I would be happy to respond.
Mr. SARBANES. If the Senator will yield, I commend the Senator for his very strong statement. This is an extremely important issue. I appreciate the Senator speaking out on it. We have joined together, actually, in introducing legislation on this privacy question, along with Senators LEAHY and DODD and HOLLINGS. Earlier today we raised the issue with the chairman.
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