California Senate OKs Financial Privacy, Measure Moves to Assembly
SACRAMENTO - Privacy legislation that would prevent financial institutions and other businesses from sharing personal information without customers' approval has been approved by the California Senate. The measure, SB1, was approved on a 23-6 vote with 11 members not voting. The bill now moves to the Assembly, where financial privacy...
Your article was successfully shared with the contacts you provided.
SACRAMENTO – Privacy legislation that would prevent financial institutions and other businesses from sharing personal information without customers’ approval has been approved by the California Senate. The measure, SB1, was approved on a 23-6 vote with 11 members not voting. The bill now moves to the Assembly, where financial privacy legislation has been killed in each of the past three years. Among those supporting the measure is the California Credit Union League. It is opposed by the banking, insurance and securities industries, which have spent more than $20 million over the last three years to defeat similar measures. “The public has waited long enough for financial privacy,” said state Sen. Jackie Speier (D-8), who sponsored the measure along with Senate President Pro Tempore John Burton (D-3). “They are tired of unwanted invasions into their personal life. You wouldn’t tell a stranger your personal financial details, would you? Yet that’s what happens every minute of every day in California.” The bill marks the fourth time that Speier has attempted to get the Legislature to approve some type of financial privacy legislation. “I’m optimistic that, with Senate leader Burton’s help, we can deliver it via the Legislature this year,” Speier said. But, she warned, “If the power and money of the banks, insurance companies and securities firms win in the Assembly yet again, then the public will simply have to take matters into their own hands. I hope it doesn’t come to that.” Even before the bill was voted on in the Senate on Monday, March 3, efforts were under way to put the issue before California voters in the form of a ballot initiative. Chris Larsen, chief executive officer of E-Loan, said he doubted the Assembly would approve any type of financial privacy legislation and was moving ahead with plans for an initiative on the March 2004 ballot that would limit the sharing or selling of information by financial institutions and insurance companies. “I just have no faith that we’re not going to have shenanigans pulled again in the Assembly,” Larsen said. “My call is there are still too many big players that will say, `I don’t care what it costs, I’m going to stop it in the Legislature.’” Larsen had given $1 million of his own money to try to put the measure before voters. It would require signatures of more than 373,000 registered voters before it could go on the ballot. Speier said opinion polls show upwards of 90% of California residents favor financial privacy legislation. Speier’s bill would give consumers the option whether to have their information shared between affiliated companies. It would require written permission before that information could be passed to third parties. Speier said her bill would provide greater safeguards than those in the federal Gramm-Leach Bliley Act. The banking and insurance industries have argued the bill is unnecessary and would open consumers up to identity theft. They also contend that the bill would be costly. “Any regulation of information exchange will impose costs upon businesses,” banking and insurance industry representatives said. “In a variety of ways, SB1 takes a costly approach where a more focused approach would produce the same outcome far more efficiently. If the Legislature hopes to enact a workable bill, cost implications must be considered.” Supporters of the measure contend that the biggest cost to opponents is in “lost profits from cross marketing opportunities that come at the expense of consumer privacy.” In addition to the league, those supporting the bill include the American Civil Liberties Union, American Federation of State, County and Municipal Employees, AFL-CIO; Consumer Action, the Consumer Federation of California and Consumers Union. Those opposed include the California Bankers Association, American Council of Life Insurers, the Association of California Insurance Companies and the California Financial Services Association. -
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing. Once you are an ALM digital member, you’ll receive:
Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers,
resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
Exclusive discounts on ALM and CU Times events.
Access to other award-winning ALM websites including Law.com and GlobeSt.com.
Go beyond the standard loan shopping experience and engage your members with a pre-qualification solution that consistently delivers 30 percent more loans at a fraction of your current cost. Realize the power of “No Credit Impact” messaging and the latest in lending technology.
Are you fighting for digital transformation alone at your credit union and facing resistance? This toolkit is stocked with compelling benefits, stats, success stories, and a slide deck to help get buy-in from the rest of the C-Suite or board.
What is your credit union’s profitability plan and how are you progressing towards those goals? This eBook outlines five success strategies to guide your credit union’s journey to a strong profitability plan.
Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!
Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
Exclusive discounts on ALM and Credit Union Times events.
Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.