SACRAMENTO, Calif. -- In a move which some credit union supporters expected but hoped would not happen, California Governor Arnold Schwarzenegger has vetoed a landmark piece of legislation that would have given credit unions recourse in the courts when damaged by a merchant's card security breach.

The bill would have brought the industry's data security standards into state law and would have provide a way for credit unions to recoup the costs of reissuing cards and other expenses tied to these breaches. But in his veto statement, the Governor alluded to the tie between industry standards and state law as a weakness in the legislation.

"This bill attempts to legislate in an area where the marketplace has already assigned responsibilities and liabilities that provide for the protection of consumers," Schwarzenegger wrote. "In addition, the Payment Card Industry has already established minimum data security standards when storing, processing, or transmitting credit or debit cardholder information. This industry has the contractual ability to mandate the use of these standards, and is in a superior position to ensure that these standards keep up with changes in technology and the marketplace. This measure creates the potential for California law to be in conflict with private sector data security standards."