X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SACRAMENTO, Calif. – Legislation that would have limited financial services companies from sharing customers’ personal information was killed Tuesday (June 17) by the Assembly Banking and Finance Committee, marking the third time in three years a financial privacy measure has gone down to defeat in the California Legislature. “This is a bad day for consumers, but it’s not the last day,” insisted Democratic state Sen. Jackie Speier, who authored the bill and three previous measures. The rejection of the bill is expected to open the way for an even tougher measure to be placed before voters in March on a statewide ballot initiative. Consumer and privacy rights groups report collecting more than 200,000 signatures so far to place the issue before voters. A total of 373,000 valid signatures are needed to qualify the measure for the ballot. Speier’s bill, SB1, had been backed by the California Credit Union League as well as Gov. Gray Davis and an assortment of consumer and privacy rights organizations. It was opposed by the banking and insurance industries, which poured more than $20 million into defeating similar measures in the past. The 12-member Assembly committee, with a bloc of moderate pro-business Democrats, voted 4-3 against the measure. Five members did not vote. The bill needed seven votes to pass. “From the beginning of the year we knew that (the committee) would be the major hurdle for the bill moving forward,” said John Van Etten, a legislative lobbyist with the league. “It wasn’t a surprise.” The bill in March had easily passed the Senate by a 23-6 vote. “We’re disappointed that it didn’t pass,” said Van Etten, noting that credit unions were the only financial institutions that supported the measure. “There’s a number of next steps that can be taken,” he said. “We’ll work with the other supporters of the bill in deciding what to do with SB1. If they decide not to move forward with SB1, we’ll look at the other options.” Rather than amending the bill further and seeking reconsideration, Van Etten said it appeared likely that the ballot initiative would be the next option. “The consumer groups have expressed a lack of willingness to make further amendments to further water down the bill,” he noted. “We will meet in the coming days with the supporters of the bill and the author to see whether that is a vehicle they want to use to continue to advance the issue.” Speier said she believed placing the matter before voters in a ballot initiative was “inevitable.” “I’ve gone a long way to meet legitimate concerns while keeping this the strongest financial privacy measure in the nation,” she said. “I believe this is a balanced, fair approach. If the financial services industry and a few members of the Assembly won’t act now, then an initiative seems inevitable. “Consumers will win, one way or another,” she said. The league has not taken a position yet on the ballot initiative, although Van Etten said he felt financial privacy legislation was probably best dealt with in the Legislature. “We have put all our efforts into SB1 as a vehicle to address the issue, and I think this is an issue best addressed in the Legislature,” he said. “It allows for better debate. It allows for more technical debate, which in a field as complex as financial services, there’s a lot of very important but subtle points that need to be addressed. And as with most pieces of major legislation, there may be some tweaking that may need to be done down the road and it’s easier to do so when the bill goes through the legislative process.” Speier’s California Financial Privacy Information Act would have required financial services companies such as credit unions, banks, insurance firms and brokerages to obtain written permission from customers before being able to share or sell their customers’ personal information. Speier has often cited public opinion polls showing public support for financial privacy legislation at upwards of 90%. “I believe that consumers, and consumers alone, have the right to control their own personal financial information,” she said. “It’s really that simple.” Opponents of Speier’s measure contended that the bill would have resulted in higher costs for consumers and could leave consumers susceptible to identify theft. Opponents included the California Bankers Association, the California Chamber of Commerce and the California Financial Services Association. Supporters included the league, the American Civil Liberties Union, California Labor Federation, Consumer Union, Consumer Action and the Privacy Rights Clearinghouse. The bill also was supported by embattled Democratic Gov. Gray Davis, who announced his endorsement of it a few weeks ago. -

Credit Union Times

Join Credit Union Times

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.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.