Privacy S 1399, S 1055, S 30, S 324, S 526, S 1014, HR 2036, HR 2720 On Sept. 4 Sens. Dianne Feinstein, D-Calif., and Richard Shelby, R-Ala., introduced legislation aimed at curbing identity theft by, among other things, requiring banks and credit bureaus to black out all but a few digits of credit card numbers printed on receipts. A Senate Judiciary subcommittee hearing had been scheduled on the bill for Wednesday but has been postponed. The bill also calls for credit bureaus to alert credit issuers of discrepancies between a customers address in the bureaus records and the address in the consumers application for credit; require credit card companies to notify consumers when an additional credit card is requested on an existing credit account within 30 days of an address change application; codify the industry practice of placing fraud alerts on a consumers credit file; give the Federal Trade Commission authority to impose fines against credit issuers that ignore sure alerts; and direct the FTC to improve information-sharing among credit bureaus when consumers report fraud. The bill follows one Sen. Feinstein introduced in June that would require companies to get affirmative customer permission an opt-in before collecting, selling, or marketing such personal data as Social Security numbers or financial and health information. The bill would also let customers opt out of the sharing of their less-sensitive information, such as addresses and phone numbers. It does not block banks from sharing financial and less-sensitive information with their affiliates. Other pending privacy bills include one Reps. Edward J. Markey, D-Mass., and Joe Barton, R-Tex., reintroduced Aug. 2 that would amend the Gramm-Leach-Bliley Act by requiring that financial institutions get customers explicit permission an opt in before divulging their personal information to other companies. The opt-in requirement would apply to affiliates as well as third parties. The bill also would prohibit financial institutions from denying services to customers who block information-sharing. Additionally, consumers would be able to inspect the personal information collected by their financial service providers and correct any inaccuracies. Among other changes to regulatory oversight, state attorneys general would be granted enforcement authority. Separately, Commerce consumer protection subcommittee Chairman Cliff Stearns, R-Fla., is preparing to introduce a bill that would further limit the uses of financial and medical information, but preempt state and local privacy laws and possibly restrict class-action lawsuits.
PENDING LEGISLATIONBankruptcy Reform S 220, HR 333The 32-member House-Senate conference committee postponed its first meeting, scheduled for Wednesday, to begin ironing out differences between bankruptcy overhaul bills each chamber passed independently in March. Staff met during the August recess and drafted a series of technical corrections to the legislation. It is not clear when the conference committee will meeting, and the outlook for the legislation is uncertain.Most Democratic conferees are expected to try to add such consumer protections as requiring credit card companies to tell customers how long it would take them to pay off their debt if they made only minimum payments. The 19-member House negotiating team, named July 31, is led by Judiciary Committee Chairman James Sensenbrenner Jr., R-Wis., Rep. Henry Hyde, R-Ill., and Rep. George Gekas, R-Pa. The 13 Senate conferees were announced July 17, and include Judiciary Committee Chairman Patrick Leahy, D-Vt., and Sen. Joseph Biden, D-Del. The Senate approved its bankruptcy reform bill March 15 by a vote of 83 to 15. A similar bill had cleared the House on March 1 by a vote of 306 to 108. Among other provisions, the House and Senate bills would establish a means test to determine whether people should be allowed to file for protection under Chapter 7 of the federal Bankruptcy Code, which discharges filers from credit card and other unsecured debts. It would make more debtors file under Chapter 13, which requires them to pay off most or all of their debts. The conference will have to resolve two main differences between the bills: whether to supersede state homestead laws, which a handful of states including Texas have, that let wealthy debtors thwart creditors by buying expensive homes that cannot be seized; and whether to prohibit people convicted of violent crimes from filing for bankruptcy to avoid paying court-ordered fines. The White House said in an Aug. 6 letter to the Senate conferees that the administration strongly opposes the homestead provisions in the Senate version of the bankruptcy bill, and strongly urges the conference to adopt the House version, which effectively preserves states existing exemption laws. Deposit Insurance S 128, S 227, HR 1899, HR 746, HR 1293, HR 135 The terrorist attack caused the House Financial Services Committee and Senate Banking Committee to postpone hearings this week on deposit insurance reform and the July failure of Superior Bank FSB and its implications on the deposit insurance system. The House Financial Services subcommittee hearing is expected to be rescheduled for today. It is not clear when Senate Banking will hold its hearing that was cut short on Tuesday. In addition to the rescheduling of these inquiries, the push on deposit insurance is expected to include hearings in October by the Senate Banking financial institutions subcommittee, whose chairman, Tim Johnson, D-S.D., is expected to invite several former regulators to testify. Sen. Johnson and Rep. Spencer Bachus, R-Ala., are crafting deposit insurance overhaul legislation that could be introduced in the House as early as next month and in the Senate as early as yearend. Several bills have already been introduced. House lawmakers introduced legislation May 17 that would raise the deposit insurance coverage limit for in-state municipal deposits. Under the bill, introduced by Reps. Paul Gillmor, R-Ohio; Doug Bereuter, R-Neb.; Rep. Bob Ney, R-Ohio; and Rep. Stephanie Tubbs Jones, D-Ohio, the coverage limit would equal an institutions total equity capital. This is similar to a bill Sen. Robert Torricelli, D-N.J., introduced on Jan. 31 that would give municipal deposits 100% federal insurance coverage. In-state public deposits are currently insured for up to $200,000, and out-of-state municipal deposits are guaranteed up to $100,000.Rep. Ney has a separate bill, introduced March 29, that was the starting point for discussion. His bill would merge the bank and thrift insurance funds, let the FDIC charge fast-growing institutions a special fee, and give regulators more flexibility when the funds ratio of reserves to insured deposits falls below the statutory minimum of 1.25%. On April 3, Rep. John J. LaFalce of New York, the committees top Democrat, introduced a narrower version of the Ney measure. The LaFalce bill would only merge the bank and thrift funds. Rep. Joel Hefley, R-Colo., introduced legislation Feb. 27 to increase federal deposit insurance coverage to about $200,000 per account. Sen. Tim Johnson, D-S.D., introduced the same language in the Senate in January. The Johnson and Hefley measures would index the coverage limit to 1980 price levels, when the deposit coverage limit was last raised, to $100,000 from $40,000. Afterward, the limit would be adjusted every three years to the consumer price index to keep up with inflation. Predatory Lending HR 1051-1061 Senate Banking Committee Chairman Paul Sarbanes is expected to soon introduce comprehensive legislation intended to curb predatory lending practices and hold hearings on payday lending and such credit card company practices as extending large amounts of credit to college students and giving customers incentives to hold high balances. The hearings will follow ones the Maryland Democrat held in July on predatory mortgage practices. A draft summary of the Sarbanes bill calls for expanding the number of loans subject to protections under the Home Ownership Equity and Protection Act, which uses rates and fees to define high-cost loans and trigger additional reporting requirements. Specifically, the draft suggests restricting a creditor from financing any portion of the points, fees, or other charges topping 3% of a HOEPA loan total; prohibiting prepayment penalties after the first two years of the loan; and limiting the prepayment penalty during the first two years to 3% of the loans total. It also proposes outlawing up-front payment or financing of credit insurance on a single-premium basis for HOEPA loans; prohibiting balloon payments for such loans; and limiting mandatory arbitration clauses in the loans to make it easier for borrowers to sue lenders. The Sarbanes measure is expected to be similar to a package of 10 bills Rep. John J. LaFalce of New York, the ranking Democrat on the House Financial Services Committee, introduced in March to create what he calls a financial services consumer bill of rights. Money Laundering S 1371, S 398, HR 1114 A bipartisan group of senators introduced money-laundering legislation Aug. 3 that would restrict U.S. banks dealings with foreign banks and customers. The Money Laundering Abatement Act would bar U.S. banks from opening correspondent accounts for foreign institutions with no offices or branches, or shell banks. It would require banks to perform enhanced due diligence before opening a private account of $1 million or more for a foreign national or for an institution chartered by countries considered to have weak anti-laundering enforcement. The bill would also give federal law enforcement authorities the power to subpoena the records of a foreign bank that has a U.S. correspondent account. If a foreign bank were to refuse to provide the subpoenaed records, the U.S. bank would be required to close the foreign institutions account. The sponsors include Sen. Carl Levin, D-Mich., and Sen. Sarbanes. The bill is similar to measures Sen. John Kerry, D-Mass., introduced on Feb. 27, and House Financial Services ranking Democrat John LaFalce of New York introduced April 2. S Corporations S 1201, S 936, HR 1263 A broad-based coalition of banking and business groups including the Independent Community Bankers of America, Independent Insurance Agents of America, U.S. Chamber of Commerce, and even the National Cattlemens Beef Association is gearing up to push Congress to liberalize the subchapter S section of the tax code. Corporations eligible for such tax status pay no corporate taxes, passing their profits directly to shareholders, whose dividend income is taxed. Sen. Orrin Hatch, R-Utah, on July 19 introduced legislation that would expand the number of banks eligible to become S corporations and let members of one family be treated as a single shareholder. Currently only businesses with fewer than 75 shareholders are eligible. The Hatch bill would increase the allowable number of shareholders to 150. The bill, co-sponsored by Sen. John Breaux, D-La., is similar to one introduced May 23 by Sens. Wayne Allard, R-Colo.; Craig Thomas, R-Wyo.; and Tim Johnson, D-S.D. A companion bill was introduced in the House March 29 by Rep. Scott McInnis, R-Colo. Supporters had hoped to move the bills as part of a larger measure to raise the minimum wage and provide tax breaks to small businesses.