Magazine article American Banker

Finance Reform Bill Called Threat to State Privacy Laws

Magazine article American Banker

Finance Reform Bill Called Threat to State Privacy Laws

Article excerpt


The National Association of Attorneys General blasts the financial reform legislation in a draft of a letter to House and Senate negotiators, saying the privacy protections and other consumer safeguards in the legislation would undermine tougher state laws.

The draft letter, which circulated among lobbyists and others last week, reads in part: "These provisions will have the effect of preempting state charities and consumer protection laws with regard to insurance companies within a state, and will not provide adequate protection for private financial and medical records.

"We strongly oppose" the provisions, the group writes.

A spokeswoman for the association said she could not comment on the letter because it is has not been finalized.

The letter urges lawmakers to beef up privacy protections by requiring that banks get "explicit permission" from consumers before disclosing confidential data to affiliates or third parties.

The House version of the financial modernization bill would require financial institutions to give consumers a limited period of time to block data transfers to third-party marketers, but it would not restrict disclosures to affiliates. The Senate version says little about privacy.

"Consumers do not differentiate between affiliates and nonaffiliates when seeking to protect against the sharing of personal financial information," the attorneys general write. "Congress likewise should not differentiate between the two, and should provide equal privacy protections in both contexts. …

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