Direct Newsline (PRIMEDIA Business Magazine)
California State Senator Jackie Speier [D] suffered another defeat in her fight to pass a financial privacy bill yesterday when an assembly committee failed to approve her SB 1.
The bill, which goes further than federal law in that it requires an opt-in for sharing of consumer data with third parties, won three votes in the Assembly Banking and Finance Committee, with four against, according to Robert Herrell, Speier’s staff director. Four assembly members did not vote, and one was absent.
“Its a bad day for consumers, but its not the last day,” Herrell commented. “Consumers alone should have the right to control their own information.”
He added that the bill is still alive in the assembly and could be reconsidered. But for now, financial services lobbyists are breathing a sigh of relief.
Supported by Gov. Gray Davis and passed by the state Senate, the bill would require that financial institutions obtain a consumers permission before sharing information with outside companies, “particularly non-financial ones,” Herrell said.
Generally, the bill converts the opt-outs allowed in the Gramm-Leach-Bliley Act, a federal law, to opt-ins, and turns the no-opts to opt-outs, Herrell continued.
However, Speier recently tweaked the bill to allow a no-opt provision in at least one instance. Institutions would be free to share data with a wholly owned subsidiary in the same line of business, under the same regulator and with the same branding.
Herrill argued that the financial industry now faces a bigger threat: a ballot initiative that has drawn 200,000 signatures.
The measure, which would appear on a ballot next March if 372,816 signatures are gathered before Aug. 22, would also require an opt-in for sharing of information with affiliates or third-party companies. [Direct Newsline, June 17]. However, it rejects the opt-out allowed by Speier in SB 1 for financial institutions that have joint marketing agreements.
Another privacy group, the Foundation for Taxpayer and Consumer Rights, also demanded some revisions in SB 1, but announced yesterday that it was satisfied with the bill.
Speier’s last version of the bill, SB 733, died in the assembly last August. Another version failed to pass in 2001.
Herrill claimed that the financial services industry spent $20 million to defeat the bill in those two years, and that the figure is higher now.
Introduced last December, SB 1 was co-authored by Senate President Pro Tempore John Burdon [D].