Bush Privacy Decision: Financial Data Next?
Blackwell, Rob, American Banker
The Bush administration's surprise decision to approve new medical privacy rules changes the political equation for financial privacy legislation.
Privacy advocates promptly declared victory and predicted that the President would support tougher limits on how financial institutions use data about their customers.
"We are very encouraged by what the President did," said Edmund Mierzwinski, consumer program director of U.S. Public Interest Research Group. "If we got a bill to him, this makes it look like he would sign it. This is totally in keeping with statements he made during the campaign that he is a privacy kind of guy."
Lawmakers who are active on the issue, like Rep. Edward J. Markey, agreed.
"The decision on medical privacy indicates to Congressman Markey that the administration is paying attention to overwhelming public support for tightening up rules regarding the sharing of personal information with commercial enterprises," a spokesman for the Massachusetts Democrat said.
"Financial privacy is in many ways just as sensitive as medical privacy, in that much of our private personal spending involves health. Your financial records are your family's DNA and should not be reproduced or transmitted to others without your permission."
Tough medical privacy rules written during the Clinton administration took effect April 14, even though health-care interests had argued that they should be rewritten to lower the cost of compliance and reduce the paperwork burden. Among other things, the rule requires health-care professionals to obtain a patient's consent before releasing any medical information.
The administration had recently asked for additional comments on the rule, and many Washington observers had expected significant modifications. Though administration officials said changes are still possible, President Bush issued a strong statement supporting the rule. Perhaps more relevant, however, is the sense that the President is emerging as more pro-privacy than expected.
The President will "tend to side with the privacy point of view," White House spokesman Ari Fleischer told reporters last week. "It's good for business to honor people's privacy."
Before his inauguration, President Bush told an Internet news service, ZDNet, that he planned to "criminalize identity theft and guarantee the privacy of medical and sensitive financial records."
"I will make it a criminal offense to sell a person's Social Security number without his or her express consent," he said.
Separate bills pending in Congress would bar commercial use of Social Security numbers and would require financial companies to get explicit permission from customers -- an "opt-in" -- before sharing detailed spending information with either an affiliate or a third party. Financial companies would also have to give customers a chance to block, or "opt out," of data-sharing with affiliates and third parties.
That's far beyond the protections in the Gramm-Leach-Bliley Act, which require financial companies to give customers a chance to opt out of data-sharing only with third parties. …