FINANCIAL SERVICES: VOTE FOR PRIVACY
July 1, 1999
Dear Representative:
Today you may have as many as four opportunities to vote for privacy in connection with the Financial Services Act H.R. 10. We urge you to embrace all four opportunities and to acknowledge that people have a right to control over their personal medical and financial information.
H.R. 10 would remove statutory walls that currently separate banks, securities firms and insurance companies and as a result, allow them to affiliate with one another. ACLU takes no position on this aspect of the legislation. However, removal of these barriers has the subsidiary effect of threatening privacy. Now is the time for Congress to act to protect that privacy.
The rule governing consideration of H.R. 10 effectively prohibits Congress from voting on meaningful privacy protections, and for that reason, we urge you to oppose the rule. The rule would prohibit votes on two amendments that are essential components of the financial services reform effort. The first is an amendment by Rep. Markey, which would have given bank customers the opportunity to affirmatively "opt out" of the sharing of personal information about them among affiliates of the bank and with non-affiliated third parties. This amendment is necessary because the affiliation of banks and non-bank entities will make available to each a wealth of the most personal kind of information -- ranging from medical records to mortgage payments -- that would permit massive invasions of privacy. Instead of allowing a vote on the Markey amendment, the rule allows a vote on the Oxley, Price, Roukema amendment. It would provide a limited opportunity to opt out of the sharing of personal financial information with non-affiliated parties. However, the amendment does not go nearly far enough to protect financial privacy and includes numerous and large loopholes to its privacy promise. While the adoption of the Oxley, Price, Roukema amendment would improve the bill, H.R. 10 would still lack essential privacy protections that would have been afforded by the Markey amendment, and for that reason, we urge you to oppose the rule.
We also urge you to oppose the rule because it denies the opportunity to vote on an amendment by Reps. Condit and Waxman to protect medical records privacy. This amendment would have deleted from the bill a medical records "privacy" provision that would pre-empt more protective state laws. As it stands, H.R. 10 offers essentially no medical records privacy rights to replace the rights it would usurp, numerous exceptions to the medical records privacy it purports to afford, and no meaningful remedy for violations of medical records privacy. Like the Markey amendment, this amendment would provide essential protections, and because the rule precludes a vote on the amendment we urge you to oppose the rule.
However, if the rule is adopted despite these objections, we strongly urge you to support an amendment by Reps. Paul, Barr and Campbell to prevent bank regulators from using back door means of requiring banks to put in place "Know Your Customer" programs that violate customers' financial privacy. Earlier this year, bank regulators withdrew proposed Know Your Customer regulation after receiving 250,000 negative comments. The regulation would have required banks to monitor customer transactions, determine their customers' sources of funds, profile their customers to decide which transactions are "normal and expected," and report to the Treasury Department's super secret Financial Crimes Enforcement Network ("FinCEN") transactions that do not fit the customer profile. Even though the regulation was withdrawn, regulators left in place Bank Secrecy Act compliance directives that require the same thing. The Paul, Barr, Campbell amendment would put banks out of this business of spying on their customers for the government, and put banks in the same position as other elements of society by making voluntary the reporting of possible violations of law. It would also require FinCEN to dispose of reports of allegations of possible violations of law, instead of keeping these unsubstantiated allegations in perpetuity and long after the expiration of any relevant statute of limitations, as is now the practice. The amendment would also increase from $10,000 to $25,000 the threshold -- unadjusted since the early 1970's -- for reporting cash transactions to FinCEN. We urge you to support this amendment to increase customer financial privacy as against governmental intrusion.
One of principles of fair information practices is that sensitive personal information given up for one purpose ought not be used for other purposes without the consent of the person to whom such information pertains. If enacted into law even with the amendments we have urged you to support, H.R. 10 would do violence to that principle. It would permit banks to enter into more affiliated relationships and at the same time allow for the sharing of more personal financial information among those affiliates without the consent of the person to whom such information pertains. At the same time, H.R. 10 would actually diminish medical records privacy by pre-empting more protective state laws. Accordingly, we urge you to oppose H.R. 10 even if the Paul, Barr, Campbell and Oxley, Pryce, Roukema amendments are adopted.
Sincerely,
Laura W. Murphy
Director
Gregory T. Nojeim
Legislative Counsel