Banks and the White House are expected to square off during a two-day hearing that gets under way today on privacy provisions in financial reform legislation.

Industry representatives are expected to testify that the protections in the House-passed bill are more than adequate. The bill, approved July 1, would let customers prohibit banks from sharing account information with third-party marketers.

Bank representatives are expected to argue that language in the bill should be tightened to avoid "unintended consequences" that could choke commerce.

Meanwhile, the Clinton administration is expected to push for more protections. On Wednesday, Treasury Under Secretary for Domestic Finance Gary Gensler will reaffirm the White House's view that consumers should also be able to stop banks from sharing marketing-related information with affiliates.

The collision of viewpoints will probably not be fatal, however. Mr. Gensler will reportedly stop short of demanding that the additional privacy protections be included in financial reform legislation. The administration is reportedly open to attaching such protections to other bills.

Several industry trade groups offered a preview of their positions at a press briefing Monday.

According to the trade associations, consumers are already well protected by privacy laws. At the federal level, for example, there is the Fair Credit Reporting Act, plus laws prohibiting deceptive pratices. Many states have even tougher statutes on the book, they said.

Moreover, the bill imposes new mandates on banks, including a requirement to draft and publicize bank privacy policies. "Disclosure is really the holy grail of privacy," said Thomas P. Vartanian, a managing partner at Fried, Frank, Harris, Shriver & Jacobson in Washington.

It is also good protection, Mr. Vartanian said. Privacy policies are the "functional equivalent" of contracts between banks and their customers, and violations can and will be litigated, he said.

Even though consumers are well protected, the industry is willing to give in on one point, said John J. Byrne, senior counsel at the American Bankers Association. Giving customers the choice to block information- sharing with third-party marketers-part of the House bill, not the Senate bill-is "the proper way to go," he said.

Still, the new opt-out provision would need to be drawn cautiously or risk damaging the "fabulous" information-driven economy, said Marcia Z. Sullivan, director of government relations at the Consumer Bankers Association.

The trade groups said the House-Senate conferees should reject the administration's call to provide an additional opt-out for affiliate information sharing.

The groups also said more time needs to be spent researching and debating the consequences. Ms. Sullivan noted that it took Congress eight years to pass the Fair Credit Reporting Act.

Overly strict privacy rules could even undermine the fundamental purpose of financial reform, she said, which is to promote joint ventures, cross- marketing, and economic efficiencies.

The preferable approach to privacy, Mr. Vartanian said, would be to let banks compete to be the best.

The hearing is being hosted by House Banking's financial institutions subcommittee.

L. Richard Fischer, a partner at the Morrison & Foerster law firm, will testify Wednesday on behalf of the American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable, and Visa USA.

He will be joined by representatives from a variety of federal agencies, including the Federal Reserve Board, the Office of the Comptroller of the Currency, and Mr. Gensler.

Today's witnesses include Robert N. Barsness, chairman of Prior Lake State Bank (Minn.), who will appear on behalf of the Independent Community Bankers of America; representatives from the thrift, credit union, and credit bureau industries; and consumer groups and academics.

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