Magazine article American Banker

Minn., N.Y. Vow to Keep Prosecuting Privacy Cases

Magazine article American Banker

Minn., N.Y. Vow to Keep Prosecuting Privacy Cases

Article excerpt


Two influential state attorneys general on Thursday promised to continue prosecuting banks that violate consumer privacy lawsand to push for broader enforcement powers.

Minnesota Attorney General Mike Hatch said he is optimistic his state will enact legislation next month making it harder for banks to use information about their customers. New York Attorney General Eliot Spitzer also supported requiring financial institutions to get explicit customer permission before sharing information with unaffiliated third parties. More restrictions on data sharing among bank holding company affiliates is also needed, he said.

Tougher privacy laws are pending in 22 states, and if any is enacted, it could force industry lobbyists back to the negotiating table on Capitol Hill to accept a stricter, uniform federal law, Mr. Spitzer predicted.

The two attorneys general were in town to address the Congressional Privacy Caucus. Its co-founder, Sen. Richard C. Shelby, urged states to aggressively pass and enforce privacy laws to goad Congress into strengthening the federal privacy protections.

"The state attorneys general are on the front lines all over on privacy-related matters,'' the Alabama Republican told the National Association of Attorneys General spring meeting here. "There is much that we on the federal level could learn...from the privacy protection efforts that you have already undertaken in your respective states."

Lawmakers from both sides of the political aisle agreed. "We need states to be aggressive," Rep. Jay Inslee, D-Wash., said later at the privacy caucus meeting. "We encourage you in that regard."

Sen. Shelby renewed his attack on the privacy provisions of Gramm-Leach-Bliley, describing them as "a sham" and calling for tougher laws that would require financial institutions to get the "prior, affirmative consent" of customers in order to share information with affiliates or third parties. He also criticized Gramm-Leach-Bliley for failing to require financial institutions, as part of their mandatory annual privacy disclosures, to say which companies they are sharing information with or how the data would be used.

"The reality is that the provisions are porous and do not provide the consumer with sufficient information to make an informed decision on the true ability to opt out of information sharing," he said. "The new law falls far short of what American consumers want and, I believe, deserve."

The Minnesota legislation would adopt all of the privacy protections contained in the Gramm-Leach-Bliley Act but change its "opt-out" to an "opt-in. …

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