SF Chronicle Writes Strong Editorial Opposing Banking Industry Efforts to Gut CA Financial Privacy Law
This is fantastic news! Our coalition of consumer rights and privacy advocates are in the midst of an intensive effort to convince the Solicitor General (and the Obama Administration in general) - while there's still time - to take the side of California and our Constitutional right to privacy by opposing banking industry efforts to overturn the nation's strongest consumer privacy protections.
For the backdrop on this story, check out my post from last week. For today, I'll be brief: the banks are close to convincing the U.S. Supreme Court to overturn a landmark California law that allows consumers to control the use of their personal financial information. We, along with a coalition of other organizations, fought for years to get this law enacted over the big banks and their $10's of millions in campaign contributions and armies of high priced lobbyists. Since their defeat, the same financial giants that are largely responsible for our current economic meltdown and the subprime crisis that inspired it, have been trying to overturn our historic victory in court.
Now, the first major California newspaper (SF Chronicle) has weighed in. The good news is the paper wrote an unequivocal, impassioned defense of California's right to establish it's own privacy protection laws. As the Chronicle agrees, the Obama Administration must speak out loudly and clearly in opposition to the bank industry efforts to - at a time we taxpayers are forking over record sums of money to keep these institutions solvent - strip our state of the groundbreaking privacy protections we fought so hard to win....a rare example of the people prevailing over the profit interests of the big banks.
The SF Chronicle states:
The financial-services industry spent more than $20 million in lobbying expenses and campaign contributions to stave off consumer privacy protections. The measure finally cleared the California Legislature and was signed into law only after the waffling Davis was feeling the threat of a recall, and an outraged citizenry had produced the 600,000 signatures for a financial-privacy initiative that was far tougher than anything that would make it out of Sacramento.
The banking industry immediately went to court to try to overturn Senate Bill 1. In 2005, the U.S. Court of Appeals in San Francisco sustained most of the law, while preserving a bank's ability to share limited amounts of information with affiliates for measuring a customer's fitness for credit, insurance or employment.
The principle of the California law was sensible and straightforward: Customers should have the option to prevent banks from sharing the personal information they compile from your credit-card purchases, Web site visits, account balances or other transactions and activities.
What is especially galling is that the industry's argument for exemption from state laws is a product of the 1990s-era premise that consumers are necessarily best served when financial institutions are unencumbered by government regulation. The banks maintain that the 1996 Fair Credit Reporting Act and the regulation-lifting 1999 "Financial Services Modernization Act" - oh, does that name sound ironic in hindsight - were intended to shield them from most state regulation.
If this case does end up in the Supreme Court, the Obama administration should be firmly on the side of consumers. If banks and insurance companies want to make money from selling financial "profiles" of their customers, they should be required to ask them first. The bankers' main argument against the California law is that they need a national standard on privacy rules, not 50 state laws. Fair enough. Congress and the Obama administration should consider moving toward a federal law to give all Americans control of their personal financial information.
I will be posting on this topic again soon, as we'll have built a coalition up and written a letter to the Administration by then...which I'll share here.
Click here to read the entire editorial.