Copyright 1999 The Washington Post
The Washington
Post
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June 11, 1999, Friday, Final Edition
SECTION: FINANCIAL; Pg. E01
LENGTH: 554 words
HEADLINE:
Bank Bill Privacy Provision Approved
BYLINE: Robert
O'Harrow Jr., Washington Post Staff Writer
BODY:
The House Commerce Committee, in a surprise move, endorsed
legislation yesterday that would give consumers new authority to stop banks,
securities firms and other financial institutions from sharing their information
with affiliates or other companies.
The panel approved the privacy
amendment shortly before passing a bill to overhaul the nation's financial
services industry, making it easier for banks, securities firms and insurance
companies to merge with one another and use customer information to market new
services and products.
Industry officials have fought hard against
restricting their use of customer information, saying it it would undermine the
purpose of the long-sought bill. But after hours of debate, and a series of
thwarted amendments, the committee approved a provision that would give
consumers the right to prevent financial institutions from sharing or selling
their names, addresses, account balances and transaction history. Consumer
advocates were gleeful, describing the voice vote as a historic step in
legitimizing privacy as a public policy issue.
"This is a major victory
for privacy. Now we have established in principle that all consumers should have
a right to say no," said Rep. Edward J. Markey (D-Mass.), who pressed throughout
the day to give consumers more control over their personal information. "This is
further than anything like this has gotten before."
But industry
officials were glum. For days, as it became clear that privacy had become a
central issue, they had threatened to walk away from the deal if they lost
control over customer information. After the committee vote, they pledged to
fight against the amendment in the coming months, saying it would limit their
ability to cross-market new financial products to customers. The legislation
must pass through the full House, then be reconciled with a Senate version and
finally pass muster with President Clinton before it can become law.
"It's troubling. Some of the 'opt-out' stuff could be very troubling for
our firms," said James Spellman, spokesman for the Securities Industry
Association, who said the "tide has turned" against industry during the day. "It
has put some gray clouds up there. Do I think it's sufficient to tank the bill?
It's too early yet to say."
In addition to giving consumers the right to
say no, the legislation now includes requirements that financial institutions
create and disclose privacy policies. It also gives the Federal Trade Commission
authority to enforce those policies.
David Butler, spokesman for
Consumers Union, said he and other activists were disappointed the committee had
stopped shy of requiring companies to get permission to share information with
unaffiliated companies.
"But this is a major step forward for the
protection of consumers' privacy," said Butler, who predicted an ongoing
struggle over the issue until it reaches the House floor. Butler said consumer
groups intend to press Congress to require companies to get permission before
they use customer information in some ways.
Dan Zielinski of the
American Insurance Association said industry groups intend to push back to
preserve the benefits of the legislation. "Much of the industry is very upset,"
he said. "It is a provision that . . . will need to be remedied."
LOAD-DATE: June 11, 1999 
