WASHINGTON - Tim Leslie, whose tenure as chairman of the California Senate Finance Committee effectively ended Thursday, leaves with a warning for bankers: Your opposition to my bill, which would have strengthened consumer privacy protections, was misguided - and opens the door for something more onerous.

"California could have had a good, strong, well-thought-out, as business-friendly as possible opt-out privacy bill," says the lawmaker, one of the few Republicans to have led a committee in the Democrat-controlled Legislature.

"Instead something worse [for banks] is going to come, and they aren't going to have Tim Leslie - who is pro-business - there to negotiate something that will work for them.

"I'm starting to prepare my press release that begins 'I told you so'," he said, only half kiddingly, in a recent interview.

Sen. Leslie wrapped up his nine-year Senate career Thursday when the California Legislature adjourned for the year. He has to leave the Senate because of term limits, but he hopes voters in his huge, mountainous district, centered on Lake Tahoe, will send him back to Sacramento next year as a member of the state's lower legislative house, the Assembly.

As a parting gesture, Sen. Leslie led a last-ditch effort this week to pass legislation that would require credit card issuers to give customers a chance to block, or "opt out," of having their personal information shared with bank or other affiliates or third parties. The Senate passed the bill Wednesday, and the Assembly was scheduled to vote on it Thursday. Its fate was unclear.

This bill is a scaled-down version of legislation he unsuccessfully pushed this year that would have required all financial institutions to let customers block their information from being shared with affiliated companies or any third party. That would have added to the Gramm-Leach-Bliley Act of 1999, which imposed an opt-out requirement only for data shared with most third parties.

Sen. Leslie steered the bill through his own committee, which handles banking matters, but the Senate Judiciary Committee killed it in May.

Unless his watered-down bill succeeds, the only privacy bill to come out of the Legislature's two-year session could be one that would establish an "Office of Privacy Protection" that would use existing laws to "protect the privacy of individuals' personal information" and educate the public on guarding their financial data. That bill was expected to be passed Thursday, and Gov. Gray Davis is expected to sign it.

Nearly half of the state legislatures nationwide considered privacy bills this year, but they took little action. Some merely commissioned studies on a broad range of information and technology security issues.

However, Sen. Leslie says that Gramm-Leach-Bliley has too many shortcomings for banking industry lobbyists to prevail for long.

The law "is so full of loopholes, it is absolutely worthless in terms of privacy," he said. "It is fine piece of work in terms of allowing the affiliation of financial institutions, which I support. But it is not a privacy bill."

Gramm-Leach-Bliley "denies the right of consumers to even have an opt-out provision to stop their information from being shared between affiliates," Sen. Leslie said. "And there is an exception in the law for [financial institutions] to enter into joint marketing agreements. When you get down to it, there are absolutely zero privacy provisions."

Like fellow GOP privacy hawk U.S. Sen. Richard Shelby of Alabama, Sen. Leslie argues that it is not contradictory for a Republican to take such a consumer activist stance. He describes himself as a "full-fledged conservative, free-enterprise person" who votes pro-business, pro-life, and pro-gun.

His views on privacy, he says, are driven more by practical experience than ideology.

"When I go into a bank and open an account, that's my own personal business," he said. "I don't want my bank to tell some insurance company about my personal business if I don't want them to. And I don't want them to tell their affiliated stock company. Quite frankly, it's none of their damn business."

Some Republican colleagues have argued, "That's the free market, and if you don't like that, then … you can change your account to a bank that doesn't" share information, Sen. Leslie said.

"But I believe that every major financial institution will, in … the next five or 10 years, be affiliated with one another. Therefore I won't be able to go to another bank or another insurance company, because they will all be affiliated with one another, and Gramm-Leach-Bliley says you have free access to share all that information."

Sen. Leslie hopes to sit next year on the Assembly Banking Committee, which is chaired by Louis Papan, a personal friend but a foe on privacy issues.

The senator acknowledges the irony that, while he has been pushing for strong privacy laws, Assemblyman Papan, a moderate Democrat, has the same "wait for the federal laws to work" philosophy on privacy as the financial services industry.

"You find people on both sides of the aisle who have very opposite opinions from one another," he says. "A couple of conservative legislators were co-authors of my bill. I had some of the Democrats opposing it because they didn't think it went far enough. And you have others - both Democrats and Republicans - who opposed it because they thought it went too far. So you have every kind of combination politically."

Sen. Leslie's prediction on California enacting financial privacy laws: "There's probably 60-40 odds that nothing will happen next year. The potential for an initiative on this subject won't have matured yet, and the financial institutions aren't going to sit down to [negotiate] until they are threatened by legislation of a great magnitude."

However, he draws optimism from public opinion, which he says is still in favor of strong privacy laws, and Attorney General Bill Lockyer, who "made noises" about pushing to put a financial privacy initiative on the ballot.

"Usually when 90% of the public is concerned about an issue, and the Legislature refuses to act, it lays the groundwork for some group to propose a ballot initiative," Sen. Leslie said. "California is probably the No. 1 initiative state in America - our laws not only allow for it, but we have a whole cottage industry of people looking for a fight to turn into a ballot initiative."

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