Copyright 1999 Globe Newspaper Company
The Boston
Globe
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June 10, 1999, Thursday ,City Edition
SECTION: ECONOMY; Pg. D1
LENGTH: 525 words
HEADLINE:
Banking reforms stir privacy fears;
Markey looking to curb sharing of
consumer data
BYLINE: By Aaron Zitner, Globe Staff
BODY:
WASHINGTON - With Congress
on the verge of allowing banks, brokerages, and insurance companies to merge,
consumer advocates are warning that financial firms will soon have too much
access to the private health and credit records of their customers.
A
bank might use health information from its insurance subsidiary to deny people
loans, they say. An insurance company might deny an auto policy to someone based
on a report from its banking unit that the customer bounced some checks, they
say. Currently, banks sometimes share customer information with one another or
with other companies, consumer advocates say. But the flow of information will
become far heavier, they argue, when Congress removes the Depression-era
barriers that have kept banks, insurers, and stock brokerages from buying one
another.
A bill allowing the three industries to enter one another's
business has passed the Senate, and a key House panel is set to vote on a
similar bill today. If it becomes law, the bill is expected to create a new
breed of financial "supermarkets" selling insurance, banking, and investment
services.
During today's House Commerce Committee vote, Representative
Edward Markey, Democrat of Malden, and two other lawmakers will offer an
amendment that gives consumers new rights to block companies from sharing
personal information about them.
"We've been really pushing this thing,
though it doesn't even go as far as we'd like," said Mary Griffin of Consumers
Union, which is lobbying for Markey's amendment in cooperation with Consumer
Federation of America, the US Public Interest Research Group, and other consumer
advocacy groups.
Banking, insurance, and other industry groups say
consumers are adequately protected by existing laws. For example, current rules
already limit companies in sharing medical data, they say.
Moreover,
they warn, the Markey amendment would partly undermine the rationale for banks
and insurers to merge in the first place.
Insurers want their banking
partners to name the people who recently obtained mortgages, so they could offer
homeowners' insurance to those people, said Dan Zielinski, spokesman for the
American Insurance Association, which represents property and casualty insurers.
Blocking the flow of information would deprive financial firms of new marketing
opportunities, he said.
Under Markey's proposal, consumers would have
the right to block a conglomerate from sharing personal information among its
banking, insurance, and brokerage units. But these firms would not have to seek
prior consent before sharing the information.
Firms that wanted to
provide information to other, unaffiliated companies would have to seek advance
approval from customers.
Consumers Union and other consumer groups say
customers should be asked in advance in all cases before information is shared.
John Byrne, senior counsel at the American Bankers Association, argued
that Congress should not pass the Markey amendment because it has not considered
its unintended consequences. For example, he said, some information sharing is
currently allowed to help banks guard against fraud.
GRAPHIC: PHOTO, FILE PHOTO/Representative Edward Markey
LOAD-DATE: June 10, 1999 
