[Congressional Record Volume 145, Number 76 (Tuesday, May 25, 1999)]
[Extensions of Remarks]
[Page E1082]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                INTRODUCTION OF THE BANKING PRIVACY ACT

                                 ______
                                 

                            HON. JAY INSLEE

                             of washington

                    in the house of representatives

                         Tuesday, May 25, 1999

  Mr. INSLEE. Mr. Speaker, I rise today, with many of my colleagues, to 
introduce the Banking Privacy Act. We recognize the threat to consumer 
privacy and want to return control over an individual's personal 
financial information back to the consumer.
  My constituents are shocked when I tell them that their banking 
transaction experiences are not private. With certain exceptions, 
financial institutions may legally share all of the information about 
you and your bank account activity with affiliated businesses--or 
anyone else, for that matter. This shared information includes the 
amount of each check that you write, to whom each check is written, the 
date of each check, the amount and date of any deposits into your 
account, and any ``outside information'' available, such as information 
submitted on your initial application for an account. Under existing 
law, financial institutions are not obligated to honor your request to 
restrict the dissemination of this personal information.
  I became interested in banking privacy laws after reading a letter 
from a constituent who was upset about his bank's plans to share his 
private financial records. I was shocked to learn of the stunning 
absence of statuary protections of consumer privacy. Suppose banks, 
insurance companies, and securities firms become affiliated, something 
that will occur more frequently in the future. Will a bank tip off 
affiliated stock brokers every time their consumers have a sudden 
increase in their bank account balance, causing the consumer to be 
subjected to even more telemarketing calls? Will banks ``profile'' 
their customers after reviewing their financial information, then have 
affiliates telemarket products to those customers? Will life insurance 
companies affiliated with banks review personal checking records for 
indications of risky behavior, then increase rates based on that 
information? Under current law, there is nothing to prevent these types 
of situations.
  As Congress moves to modernize the financial services industry and 
allow the lines between banks, securities firms, and insurance 
companies to blur, financial institutions gain a new profit incentive 
by sharing customers' personal financial information. Customers who 
prefer to keep their financial information private have no recourse.
  The Banking Privacy Act is a first step to return control over an 
individual's personal financial information back to that consumers. The 
Act applies to federally insured depository institutions, their 
affiliates and financial institutions covered under the Bank Holding 
Company Act.
  Currently, under the Fair Credit Reporting Act, banks must disclose 
to their customers their privacy policies to customers and make 
allowances to opt-out of certain types of information sharing 
practices. Specifically excluded from this law is customer 
``transaction and experience'' information.

  Transaction and experience information is information about a 
checking or savings account, information contained on an account 
application, or even purchasing patterns deduced through a customer's 
checking account--``account profiling.'' Transaction and experience 
information may be shared with affiliated companies or even sold to 
third parties for marketing purposes. There is no law to prevent such 
activity from taking place.
  The information is currently used to market financial services to 
customers based on their financial patterns. Banks routinely perform 
this type of information sharing. However, as we move to modernize the 
financial industry, there will be greater demand for this type of 
personal account information to market products and services to a 
targeted group of consumers.
  For example, it is not impossible to imagine that a bank holding 
company learned that a customer received a life insurance settlement 
and then made that information available to a securities firm or data 
broker to market services to that customer. While many consumers will 
appreciate the benefit of this information sharing, the decision to 
share the information belongs in the hands of the consumer and not the 
financial institution.
  Customers should be able to opt-out of information sharing policies 
in their banks and financial institutions. The Banking Privacy Act will 
require banks and financial institutions to disclose their privacy 
policies and allow consumers to opt-out of information sharing plans--
including transaction and experience information.
  The Banking Privacy Act will not affect the routine operations of a 
bank. There are specific exemptions in the bill relating to the day to 
day practices that banks have in place which do not impact consumer 
privacy. The bill will protect consumers from unwanted marketing based 
on their intimate financial details and give consumers control over the 
use and sharing of their financial information.
  Federally insured depository institutions have an obligation to help 
take a stand for consumer privacy. The government provides a safety net 
for the banks in the form of insurance and safety provisions. These 
same banks have to provide a safety net for taxpayer privacy.
  Financial privacy should not be sacrificed at the altar of financial 
industry modernization. Americans have the right to freedom of speech 
and freedom of religion, and we ought to have the right to freedom from 
prying eyes into our personal financial business. Financial 
institutions should not be allowed to share private financial 
information without customer consent. The Banking Privacy Act is a 
necessary and practical response to the erosion of financial privacy 
and the potential explosion in cross-marketing among affiliated 
financial institutions.
  I want to also thank and commend my colleagues for joining me as 
cosponsors of the Banking Privacy Act. Representatives Michael Capuano, 
Bob Filner, Maurice Hinchey, Joseph Hoeffel, Paul Kanjorski, Barbara 
Lee, Jim McDermott, Lynn Rivers, Bernie Sanders, Jan Schakowsky and 
Pete Stark have all cosponsored this bill and I appreciate their 
assistance.
  I urge my colleagues to support and pass the Banking Privacy Act.

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