Hertzberg Blamed for Death of Consumer Privacy Bill

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But an aide denies he had a position on a bill that would have limited disclosure of information.

Los Angeles Daily Journal

A consumers group on Thursday accused Assembly Speaker Robert Hertzberg of killing a bill that would have prohibited financial institutions from disclosing customer information to other companies without the customer’s written consent.

“Hertzberg really had it in for this bill,” said Jamie Court of the Foundation for Taxpayers and Consumer Rights. “This is a ‘death by speaker.’ It’s a classic case of the speaker locking a bill in committee rather than having members voting their conscience. Hopefully this is a principal reason to replace Hertzberg as speaker sooner than later.”

Other sources in the Legislature said Hertzberg wanted to prevent the bill from reaching the Assembly floor.

However, Patricia Ortiz, deputy press secretary for Hertzberg, said she was not aware of any efforts Hertzberg made against the bill and said he had not taken a position on the measure.

Hertzberg, D-Sherman Oaks, will be serving his last term in the state Legislature next year and is widely believed to be considering running for another office.

AB203 by Assemblywoman Hannah-Beth Jackson, D-Santa Barbara, was strongly opposed by the financial community, which sent a slew of lobbyists to testify against it in two policy committees.

The bill, which failed to garner enough votes in the Assembly Banking and Finance Committee late Wednesday night, may be reconsidered, but most believe that unlikely.

State Attorney General Bill Lockyer supported the measure, which addresses concerns raised by the federal Gramm-Leach-Bliley Act that allows financial institutions to merge or affiliate with insurance companies and securities brokerages. The act, which takes effect in July, allows the companies to disclose personal data on customers to their affiliates and, with certain restrictions, to third parties unless customers take action to opt out.

However, the federal law allows states to adopt greater privacy protections.

Institutions want to pass on their customers’ information to affiliated companies, which could use it to market their services to consumers whose demographics indicate they would be likely customers.

Financial institutions are required, under the new law, to give consumers a chance to request the companies not divulge personal information about them to affiliates. Consumers have started getting information in their bills explaining procedures for opting out of the disclosure, but consumer groups fear customers will throw them out, thinking they are junk mail.

“There’s no incentive to make them user-friendly,” said Gail Hillebrand, a lobbyist for the Consumers Union, publisher of Consumer Reports.

When the bill came up for a vote before the Assembly Judiciary Committee, about 20 representatives of banks, savings and loans, insurers and securities brokerages queued up to speak against it. They argued it would infringe their right to free speech, confuse consumers, boost the costs of business, increase litigation and deny consumers the opportunity to learn about valuable services.

The committee passed the measure, which then went to the Banking and Finance Committee, chaired by Lou Papan, D-Millbrae, where it sat for days without being set for hearing.

One proponent of the bill said Hertzberg warned Jackson not to bring the measure up before the committee.

“He thought it would be a tough vote for members, thinking they don’t want to alienate their business campaign contributors,” the source said.

But, consumer groups put the bill on a list of targeted “better business bills” and soon after, the bill was set for hearing.

Just before the hearing began late Wednesday afternoon, consumer groups learned that Assemblyman Carl Washington, D-Paramount, who reportedly would have voted for the bill, was away in Los Angeles, where he is running for City Council. Hertzberg appointed Dario Frommer, D-Los Feliz, as Washington’s replacement that day.

Papan allowed opponents to the bill to voice their opposition first, an unusual procedure, since proponents are usually given the chance to be heard first. The hearing lasted for six hours, and proponents did not get a chance to be heard until the late in the evening.

The measure needed six votes, but got only five with Frommer and Assemblyman Ed Chavez, D-La Puente, not voting, and Papan and Assemblyman Bill Campbell, R-Villa Park, casting “no” votes. Those voting for the measure were: Assemblymembers Elaine Alquist, D-Santa Clara; Wilma Chan, D-Alameda; Jackie Goldberg, D-Los Angeles; Carole Migden, D-San Francisco, and Patricia Wiggins, D-Santa Rosa.

“We heard that before it was set for hearing, there was a conversation between Papan and Hertzberg to the effect ‘You know your members are going to have to take a vote on this,'” said one proponent of the bill.

“No direction [from Hertzberg] was provided to Frommer except to vote his own conscience,” said Ortiz, Hertzberg’s spokeswoman.

With Jackson’s bill failing committee passage, consumers are setting their hopes on a similar bill by Sen. Jackie Speier, D-Hillsborough, which she amended Wednesday to make it broader to apply to more financial industries. The measure, SB773, will come to the Senate floor for a vote next week.

However, consumers said even if the bill passes the Senate, it still must clear Papan’s committee and faces the same stiff opposition from the financial industry.

“It’s almost impossible to find in this current legislative year a better David versus Goliath match-up,” said Sara Nichols, a legislative advocate for the California Nurses Association. “You have the entire financial community aligned against the regular people of the state who are strongly concerned about their privacy rights. When you can see they [financial companies] can prevent it from ever reaching a floor vote, it is a terrible threat to democracy. There’s no question if it went to a floor vote it would pass.”

Consumer Watchdog
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