WASHINGTON - Sen. Richard C. Shelby is a born-again Republican who is hell-bent on protecting consumers' financial privacy.

"The average person doesn't know that banks - not all banks, but a lot of banks - sell and use their confidential information … to third parties, to affiliates, and everything without their consent," the Alabama lawmaker says.

Industry Backing
Financial interests account for six of the top 20 contributors to Sen. Shelby's 1998 reelection
Rank Company Name Amount
2 MBNA America Bank, Wilmington, Del. $68,500
4 Colonial BancGroup, Montgomery, Ala. $32,200
9 Bank of America, Charlotte, N.C. $19,500
14 American Bankers Association, Washington $15,500
17 Amsouth Bancorp, Birmingham, Ala. $15,000
20 Bear, Stearns & Co., New York $14,500
Source: Center for Responsive Politics

Normally a pro-business conservative, Sen. Shelby so detested the privacy provisions mandated in the Gramm-Leach-Bliley Act that he was the lone Republican among eight senators to vote against the historic financial reform law in November.The Senate Banking Committee's No. 2 Republican insists he is still pro-industry.

"I have a lot of friends in the banking business," he says. "All of them don't agree on this. I know a lot of bankers who say they are going to advertise their banks do not sell or use your information without your consent."

Maybe, but most financial services firms hate the bill Sen. Shelby is pushing now. It would bar financial companies from selling - or sharing internally - any data without first obtaining the customer's explicit permission. Most firms complain requiring customers to "opt in" would be an expensive operational nightmare, requiring repeated solicitations to gain customers' consent.

Under Gramm-Leach-Bliley, financial companies must annually disclose their privacy policies and give customers a chance to block information sharing with third-party marketers. Asked about the protections, Sen. Shelby snorts: "That was a sham. The lobbyists won that. But the people, I believe, will ultimately win."

Sen. Shelby also blasts the recent White House plan to toughen Gramm-Leach-Bliley. That legislation would require privacy disclosures for third-party and affiliate transactions, but customers would not have to give their consent. Firms would only be required to give customers a chance to opt out of the information sharing. There are two exceptions: Customer permission would be required before a firm could share detailed spending data or medical information.

"How can you justify an opt in for medical information, and spending habits, and behavior profiling - which I like - and not opt in for [other information collected by] financial institutions?" Sen. Shelby asks. "That is obviously a sop, and I don't think at the end of the day that will fly."

Exactly why Sen. Shelby embarked on this crusade has many observers scratching their heads.

"I've talked with some people from Alabama, and nobody knows where it is coming from," a veteran industry lobbyist says. "I never thought of the guy as a consumer advocate," but "he is a political animal. And he responds to the poll numbers."

Others believe Sen. Shelby is sympathetic to the arguments of noted conservatives such as Phyllis Schlafly, president of the Eagle Forum, and New York Times columnist William Safire, who fiercely defend privacy as an important individual right.

"Republicans don't get many chances at kudos from consumer types," another lobbyist says. "It's a good issue for him, politically."

Sen. Shelby says his position is a no-brainer because he has public opinion and the Supreme Court on his side. "My poll numbers have been higher than they've ever been," he says.

Consumer demands for privacy protections rank high in polls, he adds. "Whether you are a Democrat or Republican or Independent, some people have told me it's in the 80th percentile for privacy."

A member of Congress for more than two decades, Sen. Shelby says he first delved into the privacy issue in early 1999 when numerous news articles reported that state motor vehicle departments were selling pictures and other personal information from driver's license records to marketers.

"It sort of startled me," he says. "I thought to myself, 'Why are the states selling information that the consumer, the individual, has to give to get a license?' In other words, that should be information between you and the government."

Sen. Shelby co-founded the Congressional Privacy Caucus to focus attention on a range of related issues. For instance, the panel held a hearing Thursday on the information sharing practices of Internet companies.

Sen. Shelby also teamed with Sen. Christopher J. Dodd, D-Conn., last week to offer a bill that would require marketing companies to get written parental permission before gathering or disclosing information on school children.

As chairman of the Senate Appropriations transportation subcommittee, Sen. Shelby successfully attached a provision to a spending bill last fall that will require states to get affirmative consent before releasing drivers' Social Security numbers, photos, or medical and disability information.

The Shelby provision, which takes effect June 1, toughened a 1994 law that only required citizens be given a chance to opt out of the information sharing. Sen. Shelby notes the Supreme Court unanimously upheld the 1994 law in mid-January after South Carolina challenged it.

Sen. Shelby is not worried about angering financial companies, which with real estate firms fed him nearly $1 million for his 1998 campaign when he won a third term without serious opposition. Indeed, no electoral opponents are evident on the horizon. "He's so damn safe in Alabama," one political observer says.

In fact, while most politicians try to avoid criticism, Sen. Shelby decorates his office with it.

Neatly framed editorial cartoons lampooning the senator cover a wall of his Capitol Hill office's lobby. Granted, switching parties in 1994 the day after the GOP regained control of the Senate has made him an inviting target for political satirists. One depicts him as a turncoat at the Battle of Little Big Horn who, surrounded by Democrats with arrows in their backs, says: "Nothing personal, General Custer. I've decided to join the Indians."

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