[Weekly Compilation of Presidential Documents Volume 35, Number 18 (Monday, May 10, 1999)]
[Pages 798-801]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks Announcing the Financial Privacy and Consumer Protection 
Initiative

May 4, 1999

    Thank you very much, Mari. I just wish we could have found someone 
with a little energy to make this presentation. [Laughter]
    Hillary and I are really delighted to have all of you here and 
delighted to be a part of this announcement today, because it's so 
important. And I would like to say a special word of appreciation to 
Secretary Rubin. You know, most people think of the Treasury Secretary 
as someone who's out there trying to keep the economy going, and he's 
done a reasonable job of that, I think. [Laughter] And they think of Bob 
Rubin as this sort of big, Wall Street-type brilliant person.
    But one of the reasons that I wanted him to come and work here is 
that he actually understands how big economic decisions affect 
individual people at all levels of income and all different 
circumstances in life. And I think it's a good thing for a country to 
have a Treasury Secretary that understands the big issues and then cares 
about how they impact individual citizens. And I'm very grateful for 
that.
    I want to thank Senator Bryan and Congressmen Bentsen, Gonzalez, 
Inslee,
Kanjorski, Markey, Lee, Roybal-Allard, and Waters for being here--and 
Senator Sarbanes, who can't be here, and Congressman LaFalce, who's done 
so much on this, who is here today. And I thank Chairman Levitt, 
Chairman Pitofsky, Commissioner Thompson, Assistant Attorney General Jim 
Robinson.

Tornado Damage in Oklahoma and Kansas

    Before I get into the substance of our proposals today, I would like 
to say just a few words about the terrible tornado devastation in 
Oklahoma and Kansas, which I'm sure all of you have seen the reports of, 
and perhaps even the gripping pictures of.
    Some of the most powerful tornadoes ever recorded swept through 
these States last night. At least 45 people are dead, and the wreckage 
is still being examined. Whole communities have been leveled. Homes and 
possessions have been turned into splinters and rubble.
    I have already spoken with the Governor of Oklahoma, Frank Keating, 
to tell him that I've declared Oklahoma a Federal disaster area, and we 
have just completed a similar declaration for the State of Kansas, and I 
look forward to talking to Governor Graves later today. I had a good 
talk with James Lee Witt, our FEMA director, who is now in Oklahoma with 
Buddy Young, his regional director. And they are working on what we can 
do to provide all the necessary support for people.
    We have to make sure everyone's accounted for and that the beginning 
cleanup can start. Local and State officials, fire and police, emergency 
services, National Guard personnel have already worked through the night 
and are doing a terrific job of dealing with an incredibly difficult 
situation. We're here talking about how people feel when something has 
been stolen from them. A lot of our fellow Americans have had everything 
taken from them in those two States, and I know that they will be in 
your prayers.
    The people of Oklahoma City, in particular, have suffered too much 
devastation in recent years, and they've been hit very, very hard by 
this. So we'll have more to say about that in the days ahead.

Financial Privacy and Consumer Protection

    I would like to just put this issue briefly into historical 
perspective, to emphasize the importance that I feel the entire 
Congress, without regard to party, should attach to this matter.
    We've been at this experiment in Government for 223 years now. We 
started with a constitution that was rooted in certain basic values and 
written by some incredibly brilliant people who understood that times 
would change and that definitions of fundamental things like liberty and 
privacy would change and that circumstances would require people to rise 
to the challenges of each new era by applying the old values in 
practical ways.
    This happened at the dawn of the 20th century. Mari mentioned 
Justice Brandeis. He said when we change from being an agricultural to 
an industrial society that laws built

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under simpler conditions of living could not handle the complex 
relations of the modern industrial world.
    He and the leaders of the Progressive movement, about 100 years ago, 
therefore, fought to adapt our institutions to new markets, to update 
vital protections for our citizens, to uphold the right to privacy, 
which Brandeis said was the right most valued by civilized men.
    Now, that's what's happening today; we're in the midst of another 
vast economic transformation. Once again, the laws that govern dynamic 
markets--markets so dynamic they could not have been imagined 200 years 
ago--are out of date.
    I just read--just parenthetically--I read yesterday a quote that 
said that 60 years ago the prices in London for most basic commodities 
were the same that they were in 1660, before the outbreak of the great 
London fire. In the last 60 years, most of us have seen prices go up a 
thousandfold. Thank goodness it hasn't happened in the last 6 years; 
we're--[laughter]--maybe in a different thing.
    But the pace of change is very different--not just the nature of 
change, but the very pace of it. So once again, we have to respond, 
applying our oldest values in practical ways that allow them to be 
preserved and enhanced in modern times.
    We all know that technology and competition have revolutionized the 
financial services industry. I think most of us believe that, by and 
large, these changes have been very good. But many people, as you've 
heard, don't have the knowledge to properly evaluate what is truly a 
dizzying array of options. Some are falling victim to new abusive 
practices. Others are being left out of the financial marketplace 
altogether.
    That is why today I am proud to announce our new Financial Privacy 
and Consumer Protection Initiative, to give all Americans both the tools 
and the confidence they need to fully participate in a thriving but 
highly complex 21st century economy.
    This initiative is based on five key principles, and it draws on 
several important proposals developed by the Members of Congress who are 
here today, and some who are not, whom Hillary mentioned.
    The first, clearly, is that we have to do more to protect every 
American's financial privacy. The Vice President led our efforts to 
identify areas where privacy is at risk, and financial areas came up 
over and over and over again as a matter of great concern.
    The technological revolution now makes it easier than ever for 
people to mine your private financial data for their profit. While some 
of your private financial information is protected under existing 
Federal law, your bank or broker or insurance company could still share 
with affiliated firms information on what you buy with checks and credit 
cards or sell this information to the highest bidder. This law, to put 
it mildly, is outdated and should be changed to give you the right to 
control your financial information, to let you decide whether you want 
to share private information with anyone else. I look forward to working 
with Members in the House and the Senate on this issue.
    To enhance financial privacy, we must also protect the sanctity of 
medical records. With the growing number of mergers between insurance 
companies and banks, lenders potentially can gain access to the private 
medical information contained in insurance forms. So we propose to 
severely restrict the sharing of medical information within financial 
services conglomerates.
    You should not have to worry that the results of your latest 
physical exam will be used to deny you a home mortgage or a credit card. 
There are many other important protections for medical records that 
ought to be put in place. Because Congress has given me the authority to 
act if it does not do so by August, one way or another, we will protect 
the privacy of medical records this year.
    Second, we must require greater public disclosure and enhance every 
consumer's right to know. As the First Lady just pointed out--although 
every time I hear it, I shake my head--consumers received nearly 4 
billion credit card solicitations last year.
    Some offers contain new traps for the unwary. For example, sometimes 
credit card companies advertise low interest rates known as teaser 
rates, to reel in consumers who then are surprised with unexpected 
interest rate hikes. We believe any marketing of teaser rates for credit 
cards should include equally

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prominent notice of their expiration date, their eventual annual 
percentage rate, and any penalties that apply.
    Millions of consumers have also found out the hard way that making 
only minimum payments rarely helps retire a debt and almost always 
results in very large interest payments. So we will require clear notice 
of how long and how costly repayment would be if the consumer makes only 
the minimum payment.
    Third, we have to do more to combat consumer fraud. As Mari Frank 
discovered the hard way, it is remarkably easy now for a thief to take 
out huge loans in someone else's name, run up enormous credit card 
debts, and tap into bank accounts. Last October Congress passed--and I 
was pleased to sign--the Identity Theft and Assumption Deterrence Act. 
It's a good law, but we need to give it sharp teeth. So today I'm 
instructing the Treasury and Justice Departments to give higher priority 
to cases involving identity theft, particularly those involving 
organized crime groups, with the goal of increasing the number of 
prosecutions, both at the State and Federal levels. And Treasury will 
convene a national summit on identity theft and work with the private 
sector to make it harder to steal someone else's identity in the first 
place.
    We'll also crack down on fraud committed over the Internet. If we 
want to seize the Internet's full potential, we have to stay ahead of 
those who would use this open medium to manipulate stock prices, commit 
fraud in on-line auctions, or perpetuate any other type of financial 
scam. That's why I've asked the Justice Department to step up 
prosecutions, to develop a national center for tracking Internet fraud, 
and to train State, local, and Federal law enforcement officers on how 
to recognize and root out these schemes.
    I find that law enforcement, compared to people who are doing 
criminal activity in this area, are rather like parents trying to keep 
up with their children on the computer. [Laughter] It is an endless 
effort, and we need to organize and systematize a continuous training 
and retraining effort so that we can stay ahead of the curve.
    Chairman Levitt is launching an expanded effort to arm investors 
with the information they need to protect themselves against on-line 
securities fraud. Listen to this: Complaints of Internet fraud have 
tripled in the past 6 months--just in the last 6 months. Therefore, I 
will work with Congress and Chairman Levitt to provide the additional 
resources for the SEC necessary for enforcement, beyond what I have 
already requested in our balanced budget.
    Fourth, we must provide financial services for those who have been 
denied access to credit and basic banking services for too long. Today 
I'm proud to announce that the Treasury Department will soon make 
available, through private banks, low-fee bank accounts for those who 
receive Federal benefits like Social Security.
    Unfortunately, there are some in Congress who would have us 
effectively limit, rather than expand, access to financial services in 
underserved communities. As the Senate debates this issue this week, I 
want to reiterate what I said in my veto letter to Congress. We will 
oppose any effort to weaken or undermine the continued relevance of the 
Community Reinvestment Act.
    While that act has been on the law for well over 20 years now, over 
90 percent of the lending under it has occurred in the last 6 years, in 
our administration. I'm very proud of that. It has not done anything to 
hurt bank profits, and we ought to stay with it. I know that leaders of 
the civil rights community spoke today on this subject, and I just want 
to applaud them and to encourage them to stay at it.
    Finally, as has already been said, we have to increase the financial 
literacy of the American people. It's not enough to know how to balance 
a checkbook anymore. Even those fortunate enough to have the help of 
accountants sometimes have a hard time understanding all the ins and 
outs of investing in an IRA, paying off credit card debt, or refinancing 
a mortgage.
    So today I'm directing my National Economic Council--Gene Sperling 
is here today with us--to work with our agencies to develop a plan to 
help all Americans improve their financial literacy. I think Hillary 
said

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it adds a year of income to people if they have this kind of training in 
high school.
    School is, of course, the best place to start learning about 
personal finance. The Department of Education will help all our schools 
find effective lesson plans and other tools to integrate financial 
literacy into their basic curriculum.
    So that's what we're trying to do: protect privacy, enhance 
disclosure, combat fraud, increase access, expand education. These 
principles are the same ones we used to harness the power and benefits 
of the Industrial Revolution. They are just as vital today, if not more 
so, than they were a century ago. It's time now to use them to seize the 
enormous potential of the information revolution for every American 
citizen.
    If we work together, we can help all our families have the benefits 
of new choices and new technologies. We can help our people thrive in 
the 21st century, and all we have to do is to remember how we got here 
over the last 200-plus years.
    Thank you very much.

Note: The President spoke at 2:54 p.m. in Presidential Hall (formerly 
Room 450) in the Old Executive Office Building. In his remarks he 
referred to attorney Mari J. Frank, privacy rights advocate; and Gov. 
Bill Graves of Kansas.