Lawmakers Slam Proposed Privacy RulesWASHINGTON - The Congressional Privacy Caucus on Tuesday criticized proposed rules implementing the privacy provisions in the Gramm-Leach-Bliley Act. "We feel that the proposed rule fails to establish adequate privacy protections for consumers," according to an 18-page letter signed by 10 lawmakers. Specifically, the letter urged regulators to protect any information supplied by a consumer. Under the proposed rules, banks could share information with non-affiliated third parties if it is available from a public source. Among other recommendations, the letter asked that the Federal Trade Commission to define the term "financial institution" broadly, so that the privacy rules will apply to "both traditional and nontraditional financial institutions." The proposed privacy rules were issued by federal bank and thrift regulators and other supervisory agencies, such as the Federal Trade Commission and the National Credit Union Administration, in early February. Comments were due March 31. Final rules are expected by May 12 and would take effect in November. - Rob Garver
N. Dakota GOP Picks a Banker for Governor
CHICAGO - A North Dakota banker won his state's Republican nomination for governor, opening the door for him to run against one of his bosses in the November general election.John Hoeven, president of Bismarck-based Bank of North Dakota, won the gubernatorial nomination on Saturday by an almost 2-to-1 margin at the Republican Party's state convention in Fargo. Mr. Hoeven captured 66% of the 2,011 delegates' votes to beat out the only other GOP nominee, State Senate Majority Leader Gary Nelson.
Mr. Hoeven, 42, ran on a platform of economic development and agricultural preservation. Mr. Hoeven is likely to face Attorney General Heidi Heitkamp in the general election this fall. Ms. Heitkamp is running unopposed and is expected to win the Democratic Party's nomination this weekend.
Bank of North Dakota, with $1.6 billion of assets, is the nation's only state-owned bank, and Ms. Heitkamp sits on its three-member board.
- Craig Woker
IRS Extends Forgiven-Debt Report Deadline
WASHINGTON - The Internal Revenue Service has given some lenders an extra year to comply with a new requirement to report forgiven debts.Under a federal law that took effect Jan. 1, nonbanks such as finance companies and retailers have to tell the IRS when they excuse debts of $600 or more. Banks and thrifts have had to file such reports since 1994, but the new law also extended the requirement to their credit card or other nonbank affiliates that engage in lending. The IRS said Monday, however, that it has decided to delay penalizing nonbank lenders for noncompliance until 2001 because they were focused at the end of last year on ridding their computers of year-2000 glitches and need more time to reprogram systems to meet the new requirement. Many of these lenders were unaware of the new mandate because it was not enacted until mid-December.
"It would have been extremely difficult for institutions to comply with this new reporting requirement, to the extent they even knew about it," said James E. O'Connor, tax counsel for America's Community Bankers. "There are some people who had no idea. Two weeks before the end of the year a new law is signed - these guys didn't have a clue."
Banks and thrifts, which were covered by an earlier law, will remain subject to the same penalties as before.
The IRS requires the reports because it treats discharged debts as taxable income to borrowers.
The penalty for each failure to notify the IRS is $50, up to $250,000 a year. Lenders also have to notify borrowers of their tax liability and incur $50 fines for not doing so up to $100,000 annually. Some exceptions are granted to encourage compliance by late filers.
- Dean Anason
