WASHINGTON Maryland Sen. Paul S. Sarbanes, the top Democrat on the Senate Banking Committee, has introduced legislation that would further restrict the way financial services companies use customer financial data.
Substantively identical to privacy legislation the Clinton administration proposed last year, the Financial Information Privacy Protection Act would go beyond the Gramm-Leach-Bliley Acts privacy protections, which require financial companies to give customers a chance to block, or opt out of, having their data shared with third parties. The latter protections are to take effect July 1.
The Sarbanes bill, co-sponsored initially by seven other Senate Democrats, would require financial companies to get explicit permission from customers an opt in before sharing medical or detailed spending information with either an affiliate or an unaffiliated third party. In addition, financial companies would have to give customers a chance to block, or opt out of, data sharing with affiliates and third parties.
The bill, introduced Tuesday, also would give customers the right to see the information about them that financial companies plan to share, and to correct any errors. However, the bill would let companies charge customers to access such information.
Rep. John LaFalce, the ranking Democrat on the House Financial Services Committee, plans to introduce legislation shortly that would go beyond the Sarbanes bill in governing the use of health and medical information, a spokeswoman for the New York lawmaker said. She would not give more details.
Industry lobbyists said it is difficult to predict the prospects for privacy legislation, which is expected to be opposed by Senate Banking Chairman Phil Gramm. The Texas Republican has advocated waiting until the Gramm-Leach-Bliley privacy provisions take effect before considering additional privacy laws.
Edward L. Yingling, the head lobbyist for the American Bankers Association, said, Its clear that as a freestanding bill, its highly unlikely to move in either House or the Senate. But the question has always been: Will some type of privacy provisions be added as an amendment to other legislation? There is a danger of that in the Senate.