Wednesday, March 25, 2009

Coalition Urges Obama to Defend California Financial Privacy Law

I want to come back to a story I first reported here last week: The U.S. Supreme Court is interested in a banking industry challenge to a California law that restricts the ability of financial institutions to share information about consumers - even among company affiliates.

On March 9th the Court asked the U.S. Solicitor General - the Obama Administration's top courtroom lawyer - for advice on an appeal.

Take Action - Tell President Obama to Protect California's Financial Privacy Law!

As I mentioned in my first post after finding - hidden deep inside an email box full of news articles - a headline entitled "California privacy law challenged by banks" in an obscure website called

We must now convince the Obama administration’s top courtroom lawyer – with the help of California’s two Senators (or whoever your Senate representatives may be) - to let the states set a superior privacy standard. Ultimately, an "ask me first" standard must prevail.

The Consumer Federation of California will work with our allies in the privacy rights movement to ensure that California law should govern privacy for all personal information that is not directly related to determining a consumer's credit worthiness. Please come back to this site for more information on this topic and specific “action items” you can take.

Well, I'm back, and here's the update!

But first, for those that don't know the back story, for three years the Consumer Federation of California and other privacy advocates worked to enact a law that would give consumers the right to stop banks and other financial institutions from sharing their personal information - including with "affiliates" (which can number in the thousands).

Big banks, "Business Democrats" and Republicans teamed up to kill this legislation from 2001 until 2003. After consumer and privacy advocates collected 600,000 signatures to place a privacy initiative on the ballot, the banks acquiesced to avoid a disaster at the polls. Senate Bill 1 of 2003 (Speier) became law and California established the nation's strongest financial privacy protections.

As soon as SB 1 was signed into law, the financial institutions ran to court to overturn it, arguing that other federal banking laws prevented state regulation of banks and brokerages. In September 2008, the 9th Circuit declared the right of California consumers to stop disclosure of their personal information among affiliated financial institutions, except where such information was a consumer report.

Now - with little fanfare and even less media attention - the Supreme Court is poised to take the Banking Industry lobby's appeal and possibly overturn portions of one of the most important victories for privacy advocates in recent memory.

In light of this information, a coalition of privacy groups immediately jumped into action last week, authoring an open letter to the Obama Administration urging it to defend California's landmark financial privacy law against the banking industry's legal efforts to overturn it. A copy of our coalition's letter to the President and the Solicitor General can be read here.

Our efforts were supported by a fantastic San Francisco Chronicle editorial opposing the banks' appeal entitled "The Audacity of American Bankers".

Today, CFC, also created an action alert allowing anyone to send a message directly to the President urging he stand with California, not the Big Banks!

The letter to President Obama and Solicitor General Elena Kagan were signed by The Consumer Federation of California, Privacy Rights Clearinghouse, CALPIRG, Consumers Union, Consumer Action, The Older Women's League, The California Alliance for Retired Americans, and Chris Larsen, CEO, Prosper Marketplace, and founder of Californians for Privacy Now, the original organization that spearheaded a 2003 ballot initiative campaign that turned fierce banking industry opposition into acquiescence with SB 1.

"This represents a defining moment for privacy rights" the letter states. "We ask you to stand with consumers by telling the Supreme Court to reject the banks' appeal in Brown."

Privacy advocates support the State of California's position in this legal matter, which is that there is no merit to the appeal filed by the American Bankers Association. At issue is whether federal laws preempt portions of California law that regulate the sharing of private consumer information within a financial institution's family of affiliates.

This case provides the Obama Administration the opportunity to reveal its views both on personal privacy protection and on the necessary role of the states in protecting consumers from unfair practices in the banking industry in the absence of adequate federal regulation. The letter points out that California's financial privacy law has proven a successful model for the nation, and that it fills a regulatory vacuum at the federal level.

We urge everyone - if not already done so - to urge the Office of the Solicitor General, the Obama Administration, and California Senators Boxer and Feinstein to stand up for California's right to protect the privacy of its citizenry and oppose the banking industry's appeal. Please feel free to use our letter as a template for your own.

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