Businessman says that if the Legislature doesn’t OK measure protecting financial information by next week, he will put a similar initiative on the ballot.
The Los Angeles Times
SACRAMENTO — The wealthy businessman who qualified a financial privacy initiative for the March 2 election but held off submitting the petition signatures warned the Legislature on Thursday that unless it approved a newly crafted compromise bill by Tuesday, he would act immediately to put it before the voters.
Chris Larsen, an online loan company executive who spent nearly $1 million to get the proposal on the ballot, renewed his deadline demand as the compromise bill by state Sen. Jackie Speier (D-Hillsborough) was announced amid applause both from consumer activists and their former corporate adversaries, who spent millions of dollars lobbying against the bill but are not opposing the latest version.
Under the compromise, endorsed by Gov. Gray Davis, banks, insurance companies, securities dealers and other financial institutions would be required to get a customer’s consent before financial information was sold or otherwise shared with other companies for marketing purposes. That provision also was a centerpiece of Speier’s original bill.
“No longer will people’s financial DNA be matched with the nearest financial institution” without their approval, Speier said.
She praised consumer advocates, seniors, credit unions and other supporters for forging the settlement during the last few weeks and thanked her corporate adversaries for “calling off the dogs.” Speier also indicated that it was doubtful the compromise would have been reached if not for Larsen’s efforts.
But Larsen, who helped negotiate the settlement bill, refused to ease the pressure his ballot measure has imposed on lawmakers. Repeating an earlier threat, he said both the Assembly and Senate must approve the bill by Tuesday night or he would file the signatures with the secretary of state Wednesday, the final day that the proposal could qualify for a spot on the March 2 ballot.
Larsen noted that the Assembly is expected to be the toughest hurdle. In June, moderate Democratic members of the Assembly Banking Committee scuttled Speier’s Senate-passed bill; similar versions perished during the last four years under opposition by business executives and Davis.
It would be remarkable if the lawmakers, who will return to Sacramento from summer vacation Monday, passed the bill by the deadline Larsen imposed. Seldom are any bills approved by the Senate and Assembly and sent to the governor within 24 hours, although in past eras especially important bills were known to clear both houses in 30 minutes or less.
Representatives of the banking and insurance industries, who appeared at the press conference, expressed satisfaction with the settlement but stopped short of declaring their support. Instead, they said, they shifted their position from opposing the bill to taking a neutral stance, meaning they would not work for its passage or defeat.
One opponent, James A. Clark of the California Bankers Assn., said bankers still favor national legislation, which is moving in Congress. He also sought to dismiss the suggestion that the threat of a more restrictive ballot initiative inspired banks to reach a legislative compromise. He said bankers had preferred legislative action from the outset but were prepared to wage a costly election fight against a ballot proposition if necessary.
Larsen disagreed on the influence of his plan. Of the 600,000 voters who signed the ballot petitions, he said: “Their voices were heard. Their fists were in the air.”
The compromise did not satisfy the Foundation for Taxpayer and Consumer Rights, whose officials charged it was a weak substitute for the ballot measure. “We think the ballot initiative should go forward,” said spokesman Jamie Court.
One of the major sticking points was with whom a consumer’s financial information could be released and shared. The information includes income, bank account balance, mortgage payments, credit card charges and taxes.
Under the compromise, which would become effective July 1, two options would be offered. Under the “opt-in” alternative, businesses generally would be required to get customer consent before data could be shared with outside companies such as telemarketers. Under the “opt-out” alternative, customer information would be shared with a company’s affiliates and subsidiaries, unless the consumer ordered it stopped.
Penalties could range from $250,000 for each negligent violation to at least $500,000 for every willful violation, Speier said.