[Congressional Record (Bound Edition), Volume 145 (1999), Part 19]
[House]
[Pages 27347-27350]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          PRIVACY AND H.R. 10

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentleman from Washington (Mr. Inslee) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. INSLEE. Mr. Speaker, tonight we are going to have an opportunity 
to talk about privacy and H.R. 10, the financial institution reform 
bill.
  Before we do that, I yield to the gentleman from Minnesota (Mr. 
Minge), who will address social security from perhaps a little 
different perspective.
  Mr. MINGE. I would like to thank the gentleman from Washington for 
yielding to me, Mr. Speaker.
  I was very interested in the discussion that preceded this, the 
comments that were made, especially in closing, about the Results 
Caucus. I have worked on a bipartisan basis over the last 4 years with 
my colleague, the gentleman from California (Mr. Royce) in what is 
called the Porkbuster Caucus. We have tried to focus on waste, fraud, 
and abuse, especially on pork barrel projects that have been found in 
appropriations bills and other bills.
  It is fortunate, I think, that several of the Committee on 
Appropriations subcommittees have made a real attempt to eliminate 
earmarked projects and pork barrel projects, especially the 
Subcommittee on Transportation, but that does not mean that we have 
come to the millennium. We still have these pork barrel projects. We 
still have earmarks that cannot be justified.
  Unfortunately, in the bill that was passed today we had some of those 
projects. No lesser legislative leader than the majority leader in the 
Senate has projects that he has brought home to his State of 
Mississippi which cost this country hundreds of millions of dollars, 
and unfortunately, also cost money from the programs that are affected 
by the cuts that were in the legislation today.
  I would like to focus for just a few minutes about this discussion on 
social security. As I listened to the preceding discussion, I thought 
of the phrase from Shakespeare, ``The lady doth protest too much, 
methinks.''
  It appeared that there was so much protestation that there was 
nothing that would be borrowed from the social security trust fund for 
current expenditures in the fiscal year 2000 that I thought it worth 
probing that presentation for a few moments.
  The first thing that I think is interesting to note is that the 
Congressional Budget Office itself, in a letter dated today, one copy 
of which was addressed to me but another copy of which was addressed to 
the gentleman from Illinois (Speaker Hastert), stated that, ``With the 
passage of today's legislation, we will be borrowing $17 billion from 
the social security trust fund surplus for fiscal year 2000 in order to 
cover expenses.'' That is $17 billion.
  Now, Members may say, how could we have the presentation for 40 
minutes claiming that we were not borrowing anything, and then have a 
letter like this from the Congressional Budget Office?
  Well, probably, the most important things to remember are that, 
number one, there were emergency spending measures in some of the 
appropriations bills. There has been an attempt to disregard those. 
There has been so-called directed scoring in some of the appropriations 
bills. There has been an attempt to disregard that. Finally, there has 
been an attempt to push certain expenditures into the subsequent fiscal 
year for projects and activities that are undertaken in the current 
fiscal year.
  If we had an accrual basis accounting system here, this kind of a 
trick would not work. Really, what it is important to recognize is that 
we have a return to smoke and mirrors.
  I think most Americans remember that in the 1980s and early 1990s we 
had this ongoing battle between the White House and Congress as to how 
the money was being spent. There was this duplicitous effort to try to 
justify certain budgets that were being presented by claiming that 
these budgets were going to balance at the end of the year, or in 2 or 
3 years we were going to eliminate the deficit.
  But what happened is we were not using realistic numbers. So finally, 
an element of real discipline was introduced into the congressional 
budget process by requiring that Congress use the Congressional Budget 
Office as its sole source of its budget numbers, rather than picking 
and choosing favorable numbers from the Congressional Budget Office, or 
CBO, and then favorable budget numbers from the Office of Management 
and Budget, or OMB, and then favorable budget numbers from other 
sources.
  So this particular quotation is important to recognize, because what 
it is saying is if you use consistent budget numbers from the impartial 
Congressional Budget Office, you end up with a $17 billion deficit. If 
you use numbers from the Office of Management and Budget when they are 
favorable and the Congressional Budget Office when it is favorable, 
then you can sort of jerry-rig this situation, and you can avoid most 
of that $17 billion, and then you use other gimmicks, and you can try 
to eliminate the $17 billion.
  So the protestation here that there is not a penny being touched is 
misleading. It is duplicitous. What we need to be forthright about is 
to just recognize that if we rely on the Congressional Budget Office, 
we are borrowing $17 billion.
  What should we do about it? Today I and three of my colleagues 
introduced legislation after the final vote on this most recent bill to 
assure the people of the country that if in fact we are borrowing $17 
billion or $1 billion or $25 billion, whatever the number might be,

[[Page 27348]]

if we are borrowing that from social security, in fiscal year 2000 we 
repay that $17 billion or whatever the figure is from the first 
available surplus in fiscal year 2001. That is our bill, stripped to 
its essence.
  I challenge my colleagues on the Republican side to join me in 
passing this bill promptly, because it is an enforcement device. It is 
there to put some discipline into this budget process, and to say that 
we are making this commitment to the American people with respect to 
the next fiscal year, that we will restore that money before we use it 
for tax cuts, before we use it for other spending programs, before we 
use it for any other purpose.
  I had hoped that we would have bipartisan support for this bill when 
I introduced it, but apparently it was too stiff a medicine for the 
folks on the other side. I thought it a simple bipartisan enforcement 
approach that ought to be welcomed by everyone.
  So in the days ahead, I will be talking to my colleagues on both 
sides of the aisle and urging that we get together so that at least 
this little nasty problem that continues to haunt us is addressed.

                              {time}  1930

  Mr. INSLEE. Mr. Speaker, this evening I would like to address the 
House concerning, I think, a very important emerging issue, emerging 
because of tremendous consolidation in our financial services industry 
and emerging because of people's rightful concern about their personal 
privacy.
  This personal privacy issue is one I think that has exploded on us 
because we have found, unfortunately, that there are various businesses 
that are consciously violating Americans rights of personal privacy. 
Let me give my colleagues just a little small example, because I am 
going to talk about financial services industries in an abstract, but I 
just want to tell my colleagues a little story, a little story about 
personal privacy and what happens when it is not respected.
  I was talking to this Member who was telling me that he just had 
heart surgery, and because of that heart surgery, he was on a blood 
thinner drug called Coumadin, which is fine, and it saved his life, and 
he is doing quite well.
  But about 30 days after he started on this regimen of Coumadin, lo 
and behold, he gets a solicitation in the mail from this company to buy 
some product about how to monitor his Coumadin. Someone somewhere, some 
business, for some profit motive had violated his personal rights of 
privacy by telling some strange company he had never heard of that one 
of our fellows was a good target to try to sell some product.
  If companies can violate the privacy rights of Members of Congress, 
imagine what is going on to our constituents. Unfortunately, a lot of 
bad things are happening to our constituents when it comes to personal 
privacy rights.
  Now, what brought us here tonight is the emerging consideration next 
week by the Chamber of H.R. 10, the Financial Modernization Act. For 
those who are not familiar with this, the Financial Modernization Act 
will, for the first time in the American economy, give free reign to 
banks to affiliate with hundreds of other types of financial 
institutions, insurance companies, brokerage houses, securities 
businesses. As we know, for many, many years, they have been prohibited 
from doing so.
  Many Members, myself included, believe that there are a lot of 
benefits to be had by allowing some consolidation in the industry. But 
we are very, very concerned, Mr. Speaker, that if that bill passes in 
the form that has been reported out of the conference committee, that 
what will be left out almost lock, stock, and barrel is the protection 
of consumers' privacy when banks essentially merge with insurance 
companies and merge with security houses and merge with stockbrokers.
  Let me tell my colleagues why we are concerned. There is a very 
significant infection going on when it comes to personal privacy in 
this country. I would like to alert to the House some of the things 
that have been going on, some we read about in the newspapers, some we 
learn about just talking to our constituents.
  I just want to read a story, a first paragraph from the Los Angeles 
Times this September, ``A San Fernando Valley bank sold a convicted 
felon 90 percent of the credit card numbers he allegedly used to run up 
$45.7 million in mostly bogus charges against consumers worldwide, 
according to interviews and court documents filed Friday. Charter 
Pacific Bank, which has made millions by processing credit card 
transactions for adult entertainment firms, provided Kenneth H. Thaves 
of Malibu more than 3.7 million card numbers complied from its 
merchants accounts, according to a report filed in U.S. District Court 
in Los Angeles.''
  Here we had, according to the Los Angeles Times, an instance where a 
bank violated its Members' rights of privacy and sold thousands of 
their credit card numbers to somebody who then, in a fraudulent scheme, 
ran up credit card charge numbers.
  But this was not an isolated act. We go to Minnesota where, just 
recently, a lawsuit was settled between the Attorney General of the 
State of Minnesota and U.S. Bankcorp where U.S. Bankcorp agreed, 
according to news accounts, to give $3 million to the States and 
charities because they apparently supplied telemarketing firm Member 
Works, Inc. of Stanford, Connecticut with its customers' names, Social 
Security numbers, marital status, occupation, account balances, 
homeownership status, and credit limits against the privacy rights of 
its own customers.
  Imagine how one would feel or anyone in this Chamber would feel if we 
were told that, against our wishes, in fact, a bank had given our 
credit card numbers or our account information, in fact, to some third 
party, and they end up telemarketing a product to us.
  All of us, it seems to me, have some reasonable expectation that the 
amount of money in our bank accounts is not going to be spread to the 
world, that who we write checks to is not going to be told to 
telemarketing agencies. That is a reasonable American expectation of 
privacy. But, unfortunately, that is not being honored, not by all 
banks.
  Many banks, in fact, are honoring people's privacy. There are 
thousands of banks that are being responsible, corporate citizens that 
are honoring our privacy rights. But we are having some that are not.
  Mr. Speaker, it comes down to a very personal basis when I learn 
about some things that have happened in my own State of Washington. I 
just want to read a couple personal accounts of complaints registered 
by the Washington State Attorney General's office about some real life 
stories that happen in my State.
  Here is a woman from Royal City, Washington, a nice small town in 
eastern Washington. She says, after receiving a phone call from a 
telemarketing agency and telling them that she was not interested in 
their product, an experience many of us have two or three times a night 
now, unfortunately, she says, ``In May, I was billed $59.95 on a my 
U.S. Visa credit card. Because I do not use the card, I was shocked. I 
phoned the Field & Stream Club, but they refused to cancel the 
membership. They were unable, however, to find a record of a request 
for a membership. How could they bill my credit card when I did not 
give them my number or authorize a purchase?
  ``I called U.S. Bank to file a complaint and cancel the credit card. 
The bank representative admitted that the bank had given out my 
unlisted phone number and banking information. She said it was a credit 
card `enhancement' program. I am extremely angry that my bank, I have 
been a customer for 25 years, sold my private information. I have been 
scammed by both the U.S. Bankcorp and the Field & Stream Club.''
  Her anger I think was properly placed, because Americans ought to 
have the statutory right to block their banks from giving away their 
account information to telemarketers who can turn around and call us at 
7 o'clock at night and try to sell us a product,

[[Page 27349]]

frankly, that we do not want. This ought to be an American right. We 
have got a freedom of speech in this country. We have got freedom of 
religion. We ought to have freedom from interference in our private 
information in our bank accounts.
  But she is not alone. A lady from Kent, Washington, saying she got a 
charge on her Visa bill statement. She says, ``I do not know how they 
could have gotten my Social Security number or even my address. This 
telemarketing thing seems to be a big rip-off and probably targeted 
senior citizens. I am 83 years old but still checking on all my 
billings. Thank goodness I never signed up or ordered anything from 
these people. And how did they get my Visa card number?''
  A letter from a man in Port Angeles, Washington, ``It all started 
when we received our normal Visa, but with an entry in the amount of 
$59.95 from Encore Travel Club. I did not authorize this company for 
this service, nor could I understand how they received my Visa account 
number.''
  Well, the reason the gentleman could not understand it is he would 
have the assumption that his bank would not give away his private 
financial information. But, unfortunately, the law does not protect the 
man from Port Angeles, the lady from Kent, or the lady from Royal City. 
It does not protect Americans adequately.
  Mr. Speaker, the bad news is that, if H.R. 10, the financial 
modernization bill, passes, we have this chance of going backwards on 
privacy, not forwards. I would like to share with the House why that 
is. We have the distinct chance of going backwards on privacy, because 
this bill, while it has, at least at first blush, some attempt to 
protect privacy rights of citizens, it has at least some language that 
would say that banks will not be able to sell or give away private 
financial information to what are called third parties. That means 
companies that are not associated in some way with the bank, which is 
by and large a good thing.
  There are two huge loopholes one can drive a bank truck through in 
this particular draft of the conference report. I want to address the 
House on what those two giant loopholes are.
  Loophole number one, which is too big to call a loophole, we really 
ought to call it a canyon or something, is that these privacy 
protections give consumers exactly zero right to tell their banks not 
to give away their private information to anything that is considered 
an ``affiliate'' of the bank. Now, this is an little technical for some 
folks, but let me try to explain what this means.
  This means that, while the bill might prevent a bank from giving this 
information to a telemarketer if the customer said not to, it would 
simply allow the bank to affiliate with the telemarketing company or 
with an insurance company or with a stock brokerage company or with a 
securities firm.
  This bill, as presently allowed, presently drafted would allow any 
bank, against the wishes, against the specific statement of a customer 
who told the bank do not give away my credit card, do not give away my 
account information, it would allow the bank to give it to its 
affiliated insurance company. Against the wishes of us, it would allow 
the insurance company to make a call at 7 o'clock at night to try to 
sell them a good insurance product.
  It would allow the computers, which are tremendous, I think computers 
are one of the best things that ever happened, but, unfortunately, in 
this case, it would allow banks to do computer profiling of us as 
Americans. That means that they can set up a computer profile with 
their associated stock brokering company that says, any time one has 
got $10,000 in cash, John Q. Citizen, when the computer sees he has got 
$10,000 in cash, spit that name over to our stock company and allow the 
stock brokerage company to call John Q. Citizen and try to sell them a 
stock because they happen to have $10,000 on hand.
  It allows the computers to profile us on our purchasing habits. If we 
happen to go to sports stores and buy sporting goods products, it 
allows our bank against our wishes to violate our privacy, to have that 
computer profile us and give information to an affiliated company that 
might have some sporting goods activity associated with it.
  It basically says that we are going to prevent the sin of violating 
privacy to a third party, but allow the sin of violating privacy to an 
affiliate. Why is this important? It may not be so important right now 
where today the law prevents banks from affiliating with other 
companies. But next week, if this became law, it will bring down the 
shields and allow the banks to affiliate with hundreds or thousands of 
other financial services enterprises. My colleagues and I both know 
that those market-driven folks will be most eager, anxious, looking 
forward to the opportunity to get into our bank accounts and use the 
information in our private bank accounts against us to try to sell us 
products.
  So, Mr. Speaker, if this were to pass, I do not think it is a fear, I 
think it is a fact that we will see an increase in telemarketing 
activity, using information in our own lives, in essence, against us.
  It did not have to be this way, Mr. Speaker. This bill can be drafted 
in such a way that could prevent these marketing activities, that could 
allow these affiliates to offer us the services we want. We can draft 
the bill very easily to say, as long as the consumer wants these 
services, it would allow the affiliated companies to provide them.
  But I stand here to say that Americans ought to have the right to say 
no to bank telemarketing activity with their affiliates, that Americans 
ought to have the simple right to write a letter or e-mail or fax or, 
when one signs up with one's account, check the box that says do not 
give away my private information.

                              {time}  1945

  I do not think that's too much to ask. This is a huge bill, Mr. 
Speaker, as we are all aware. This is one of the more significant bills 
we will have during this Congress, and I am convinced there is a lot of 
good that can happen as a result of it.
  I think that many financial institutions have been very candid and 
sincere with us; that they can help provide Americans with some good 
services as a result of these consolidations. But, unfortunately, while 
we do that, we should not, at the same time, allow the sin of violating 
our privacy to continue. We have to make sure that we stop that.
  So what we need to do, if in fact this bill comes to the floor, and I 
am told there is still some dispute in the conference committee about 
this language because it is so controversial, and should be, but if it 
comes to the floor we should send the conferees back to work. We should 
send the conferees back to work and tell them to come back when they 
give Americans protection against privacy right violations of bank 
affiliates. And that is something the House could do and should do.
  I want to talk about a second giant loophole in the bill. We have not 
seen the specific language as yet. We are told the conferees are still 
thrashing this out. And I hope if any of them are possibly listening to 
this they will continue to thrash to come up with some better language, 
because there is a loophole in section 2. I am looking for the section 
now, which is on page 3. Basically, this exception to the prohibition 
would allow banks to even give information to a third party as long as 
it was essentially associated with anything called a ``joint 
agreement.'' A joint agreement.
  Well, I guess a joint agreement could be the two presidents of the 
company shaking hands and saying, ``We are going to start to computer 
profile our customers and we are going to telemarket the heck out of 
them, and we are both going to do pretty well on this deal.'' That is a 
``joint agreement.'' But that joint agreement is closer to kind of a 
joint conspiracy to violate somebody's privacy. And that is another 
loophole that has to be closed if we are going to go forward with H.R. 
10. It is a simple thing to do, it will allow banks to pursue their 
duties, and we ought to do it.

[[Page 27350]]

  I want to come back to a point perhaps I made a little earlier, and 
that is that it is very important not to paint all banks with the same 
brush with the kind of things I have been talking about tonight. There 
are many banks, and I have talked to many banks in my community, 
community banks who are very socially responsible. I have talked to a 
lot of bankers, particularly small town bankers, who have built banks 
on the trust of their communities, who have told me they are angry at 
some of their bigger brethren, frankly, for violating people's privacy, 
for exposing them to the ridicule of Congress and the American public 
on this subject.
  Because those bankers understand very clearly that banks really are 
built on trust and that they do damage to their relationship with their 
customers if they violate that sense of trust. I think we are going to 
see more, in fact I know there is one bank in the next week or two in 
the State of Washington that is going to announce policies that are 
essentially what we are proposing. We are proposing that Americans have 
the right to advise their banks to provide them banking services but 
not to allow the use of those banking services for marketing purposes 
against them by some other affiliate or third party. That should not be 
too much to ask.
  So, Mr. Speaker, in closing, I would like to say that we are on the 
cusp of a new dawn when it comes to financial services. We are at the 
eleventh hour, this is last chance we are going to have to ensure 
Americans their privacy. And while this bill, H.R. 10, may have sort of 
corralled one horse, the one horse that is involved in raiding our 
privacy, it has left 5 to 500 out of the corral. Because while it has 
helped on third- party privacy protection, it is going to create a 
whole new host of financial organizations. And they are going to be 
given the opportunity to violate our rights of privacy, to telemarket 
us at 7 o'clock at night.
  Mr. Speaker, I am here to stand for any American in the next decade 
that gets a call at the dinner hour when they are trying to sell them a 
product using their checking account, their credit card, their Social 
Security number or other information. And I hope they do not call me at 
6 o'clock to complain, because I am here tonight trying to get the U.S. 
Congress to prohibit that practice.

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