Tri-Valley Herald (Pleasanton, CA)

SACRAMENTO — Threatened with a ballot initiative, lawmakers returning from vacation Monday swiftly and overwhelmingly passed a landmark financial privacy bill — the first in a string of liberal blockbusters Gov. Gray Davis wants to sign as he fights a recall bid.

Republicans and business-friendly Democrats in the Assembly joined in the scramble to approve the long-delayed measure, authored by a Bay Area lawmaker, after the financial industry drop- ped its opposition in a deal that scuttles an even stricter initiative effort.

Majority Democrats were mindful, as well, that the embattled Democratic governor stepped up his campaign for passage of the bill after an Oct. 7 recall election was scheduled, calling it the”crown jewel” of his consumer privacy protection efforts.

The Senate, which approved the measure earlier this year, is expected to concur in Assembly amendments today. The action would send the bill to Davis.

The measure is aimed at restricting the financial industry’s lucrative sale and trade of customers’ personal information, thereby squelching telemarketers, junk mail and spam.

Davis, seeking broader voter appeal, has urged the Legislature in the final four-weeks of its annual session to also pass measures:

Giving gay couples nearly the same legal rights and responsibilities as married people.

Granting driver’s licenses to undocumented immigrants.

Swapping the unpopular car-tax hike for higher taxes on cigarettes and the income of the rich.

Adopting workers’ compensation reform — an overhaul lawmakers may link with a measure providing an expansion of employer-financed health care for uninsured workers.

The series of legislative endorsements is unusual for Davis, who has typically withheld comment on bills until they reach his desk. The unpopular governor is reaching for votes from the liberal, minority and labor sectors, according to political analysts.

Experts say it was Davis’ support for the financial privacy bill by Sen. Jackie Speier, D-San Mateo, combined with the threat of a ballot initiative, that led to the flurry of activity Monday.

Three Assembly committees approved the bill, followed by the full lower house. The vote was 76-1.

Assemblywoman Ellen Corbett, D-San Leandro, a longtime bill supporter and a member of the involved committees, bragged she was able to vote for the measure six times in a single day “after four years of wrangling.”

The bill requires banks and insurers to obtain customers’ permission before selling information about them to other companies.

It also gives consumers the right to opt out of allowing financial firms to share data among different divisions.

The measure includes stiff penalties for breaking the rules about sale of customers’ spending habits, bank balances and other information, including a $250,000 fine for negligent violations and a $500,000 penalty for each willful disobedience of the law.

Speier said the victory ended “a long, arduous journey of 1,000 days and thousands of hours” to adopt “the strongest personal privacy protection in the nation.”

Assemblyman John Dutra, a Fremont Democrat who tried to help broker a compromise between consumers and business, predicted that “other states will surely follow our lead.”

The industry dropped its opposition to the bill after consumer groups collected enough voter signatures to qualify an even stricter initiative on the March 2004 ballot and threatened to file them with the state elections office unless lawmakers acted.

“We are thrilled our negotiation efforts with consumer groups and the financial industry have paid off,” said Chris Larsen, the head of Dublin-based E-Loan who financially backed the initiative effort.

After the business sector dropped opposition to the bill it has spent millions of dollars fighting, and Speier accepted modest bill amendments, GOP lawmakers joined Democrats in voting for the measure.

“I have always said that I would support a privacy bill that protects consumers and creates a reasonable, workable business environment,” said Assemblyman Guy Houston, R-Livermore. “The amendments … do this and so I am pleased to lend it my full support.”

Amendments included delaying the implementation date until July 1, 2004.

One consumer group attacked the deal between the industry and Speier, saying Californians should get the strongest protection — the initiative that would have required consumers to grant permission for sharing of their confidential data in all cases.

“If this proposal was not half a loaf, the industry wouldn’t swallow it,” said Jerry Flanagan of The Foundation for Taxpayer and Consumer Rights. “We believe people deserve the full loaf they thought they were getting with their signature [on ballot petitions].”

Though financial industry officials ceased opposing the bill, legal questions remain over how less-restrictive federal law should mesh with an increasing number of state and local laws on the issue.

Further lawsuits are expected that include challenges to the new state legislation.
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Contact Sacramento Bureau Chief Steve Geissinger at [email protected]