Privacy bill foes give up their fight
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Banks and insurance companies have decided to drop their long-standing opposition to a bill to restrict the exchange of consumers’ financial information rather than take their chances trying to defeat a more restrictive ballot initiative next year. Consumer advocates and sources in the financial services industry said Wednesday they had struck a deal that could pave the way for passage of a landmark financial privacy bill as early as Monday. Lawmakers will be under the gun. The proposed initiative has qualified to appear on the March 2004 ballot, but proponents must decide by Tuesday whether to withdraw the measure. “We’re feeling increasingly confident that we will be able to enact financial privacy legislation before the Aug. 19 deadline,” said Mike McCauley, an official with Consumers Union. “We think we have a deal that maintains the same” protections the group has been advocating. Gov. Gray Davis, who at one time offered only tepid backing for the legislation, has in recent weeks stepped up his support. Polls show the measure has strong voter approval. If the deal goes through, it gives Davis an issue to use on the campaign trail, where he is trying to persuade voters to keep him in office. SPEIER’S PRIVACY BILL The bill, SB1 by state Sen. Jackie Speier, D-Hillsborough, would require financial companies such as banks, brokerages and insurance companies to obtain their customers’ permission before sharing or selling information about them to other companies. It also would give consumers the right to opt out of allowing financial companies to share data among disparate divisions. The agreement reached Wednesday leaves Speier’s bill largely intact, but there will be some changes on technical matters, such as how the law is enforced, when it takes effect and what the compliance requirements will be. A deciding factor in the agreement appears to have been a July 29 decision by U.S. District Judge Claudia Wilkins in San Francisco upholding municipalities’ right to restrict so-called “third party” information-sharing between banks and other nonrelated institutions. A source familiar with the agreement said financial industry representatives were concerned that it could lead to new and different individual regulations by “58 counties and 400 cities” throughout California. Another factor was a threat by proponents of a ballot measure that, if approved by voters, would impose the most severe restrictions on financial institutions of any state in the country. The ballot initiative would require financial institutions to ask for, and receive, a customer’s permission before selling or sharing any data about them, either within their own house or with other businesses. Now, backers of that initiative say they are willing to withdraw it if the Legislature passes SB1. The deal hands a political victory to both Davis and Speier but denies voters the chance to pass an even stronger protection measure. |