Speier says she’ll keep trying on a measure to limit use of consumer financial records.
Legislation billed as the strongest financial privacy measure in the nation was rejected Tuesday by a state Assembly committee, despite active support from Gov. Gray Davis.
SB 1 stalled in the Assembly Banking and Finance Committee, but advocates said the issue isn’t dead, noting that a petition drive is under way to qualify an even tougher measure for the March ballot.
“This is a bad day for consumers, but it’s not the last day,” said Sen. Jackie Speier, D-Hillsborough, who wrote SB 1. “I believe that consumers, and consumers alone, have the right to control their own personal financial information — it’s really that simple.”
In apparent retaliation for the bill’s defeat, the Foundation for Taxpayer and Consumer Rights released via the Internet the first four digits of the Social Security number of each committee member who did not support SB 1.
“Politicians who are unwilling to protect their constituents’ privacy must realize that they have no privacy until new laws are passed,” said Jamie Court, executive director of the group.
SB 1 fell far short of the seven votes needed for passage in the Assembly Banking and Finance Committee, receiving three yes votes, four no votes and five abstentions.
Speier said she plans to fine-tune amendments to SB 1 in hopes of persuading enough moderate Democrats on the committee to reconsider their vote.
“That may be very optimistic thinking,” she said.
Tuesday’s vote marks the fourth year that privacy legislation by Speier has stalled before clearing the Legislature.
In the final, frenzied hours of last year’s legislative session, Speier’s legislation died in the Assembly after critics inserted last-minute amendments that she said gutted the bill.
Consumers groups have continued to support Speier, but not without a backup plan. Californians for Privacy Now has collected 200,000 of a required 373,000 signatures to place the issue before voters, officials said.
Speier’s SB 1 cleared the Senate March 3 by a vote of 23-6.
The measure attempts to limit sales or distribution of a consumer’s bank balance, debts, credit card purchases, mortgage payments, life insurance policies or other such information.
Personal financial information can be useful in telemarketing, product sales, charitable solicitations and a host of other applications.
Speier said financial institutions make about $500 million in profit annually from selling personal financial information.
Under current federal law, companies can share such information with outside firms provided they notify consumers and allow them to “opt out” by signing and submitting forms.
Speier’s 30-page bill proposed a three-tier system that would have allowed some financial information to be shared under an opt-out system; some to be shared only with written consent of affected consumers; and some to be shared without restriction.
The goal of SB 1 was to tightly restrict the ability of banks and other financial companies to sell personal information to outside firms — such as telemarketers — but not to prevent them from sharing with subsidiaries or partners.
Opponents claim the bill would be costly to implement and doesn’t adequately address the requirements of thousands of businesses, covering myriad industries, with varying needs and corporate structures.
“SB 1 in its current form is neither workable nor reasonable,” said Fred Main, chairman of the Financial Services Privacy Coalition, which has opposed Speier’s bill.
“It creates different rules for businesses who are otherwise equal competitors,” Main said. “And it creates unnecessary cost for compliance.”
Main said the sharing of financial information has resulted in a wider array of products at more competitive prices.
Main said he has not ruled out the possibility that agreement could be reached this year on privacy legislation.
Janice Gow Pettey, of the Association of Fundraising Professionals, said restricting access to personal financial information could cost charities $1.5 billion in higher solicitation costs and lower donations.
Assemblyman Juan Vargas, a San Diego Democrat, abstained from voting on SB 1 but told Speier that sharing of his family’s financial information helped him obtain a lower interest rate to purchase a Sacramento-area home.
“Am I offended that they used my financial information? No,” he said.
Shelley Curran, a spokeswoman for Consumers Union, urged the committee to approve SB 1.
“We simply think the consumer ought to have the right to just say no,” she said.
Senate President Pro Tem John Burton, co-author of SB 1, said that some financial institutions would fight the bill no matter what amendments were made.
“If they do, they can take their chance on an initiative,” he said.
Speier said financial institutions have spent $20 million to kill her privacy legislation. Main called the figure a “gross exaggeration.”
Davis reacted to Tuesday’s committee vote by saying he hasn’t given up on SB 1.
“I remain hopeful that the Legislature will respect the will of the people by sending SB 1 to me for my signature,” he said.
The Bee’s Jim Sanders can be reached at (916) 326-5538 or [email protected]