Clinton Privacy Bill to Be Offered in Congress
WASHINGTON - Democrats are expected to introduce President Clinton's privacy legislation today.House Minority Leader Richard A. Gephardt and Rep. John J. LaFalce, the House Banking Committee's ranking Democrat, are to co-sponsor the "Financial Information Privacy Protection Act," which would toughen the consumer privacy protections in the Gramm-Leach-Bliley Act of 1999. Sens. Patrick J. Leahy of Vermont and Paul S. Sarbanes, the ranking Democrat on the Senate Banking Committee, could introduce a companion bill as early as today.
The President outlined his proposal in a speech last weekend. It would require financial institutions to give customers a chance to block data sharing with both affiliated companies and third parties, whereas the financial reform law signed last November requires only that firms let customers "opt out" of data sharing with third parties. In addition, financial companies would have to get explicit permission from customers before sharing medical or detailed spending information.
- Dean Anason
FDIC Nominee's Confirmation Hearing Reset
WASHINGTON - The Senate Banking Committee has rescheduled for next Thursday its hearing on Richard C. Houseworth's nomination to the Federal Deposit Insurance Corp. board.Mr. Houseworth, a Republican and Arizona's top banking regulator, was nominated Jan. 31 to a seat on the agency's five-member board that has been vacant since Oct. 1, 1998. If confirmed, he would serve the balance of a term that ends Dec. 25, 2001. The hearing was originally scheduled next Tuesday.
- Robert Sterling
Agencies Clash Over Paying Interest on Reserves
WASHINGTON - Federal Reserve Board and Treasury Department officials disagreed during a House Banking Committee hearing Wednesday on proposed legislation that would let the Fed pay interest on reserve deposits.Because these deposits currently earn no interest, Fed Governor Laurence H. Meyer told lawmakers, banks waste resources devising complex systems to reduce their reserve requirements. Letting the central bank pay interest would end the need for such maneuvers, he said, and "would be important for increasing the economic efficiency of our banking system." The Fed is also concerned about the dramatic decline in reserve deposits, which have fallen to $6 billion from $28 billion in 1993.
Treasury Under Secretary for Domestic Finance Gary Gensler questioned the efficiency claim, citing a Congressional Budget Office study that concluded paying interest on reserves would cost the government $600 million to $700 million over the next five years. "We strongly believe that this must not be done at the expense of other priorities," Mr. Gensler testified.
Speaking on behalf of the American Bankers Association, Carl Tannenbaum, chief economist for LaSalle Banks/ABN Amro, endorsed the bill, saying it would "complement financial modernization and foster more progressive and competitive financial services."
The bill was originally proposed as an amendment to the Business Checking Modernization Act, which the House passed April 11. The amendment was withdrawn before the House voted and resubmitted as the Bank Reserves Modernization Act of 2000.
- Rob Garver