New York will not pass comprehensive consumer privacy laws this year, leading state lawmakers and industry officials predicted Friday.

"Absolutely, an encompassing privacy package will stall," said Assemblyman Robert J. Warner, the banking committee's top Republican. "I envision the Assembly passing pretty heavy privacy laws this year, but I don't expect it to go through the Senate & which shares concerns with bankers that we need to have opt-out, not opt-in legislation."

Mr. Warner said the state would "see how Gramm-Leach-Bliley is going to take effect and see what industry comes up with. We might be pleasantly surprised with the self-policing policies that banks might take."

The Community Bankers Association of New York State concurred. "We believe [banks' internal privacy] policies may tend to be more stringent than the law otherwise requires," said Alan P. Eggleston, executive vice president of Astoria Financial Corp., who testified at the second of two public hearings the state assembly held last week on consumer privacy.

The state Legislature, considered a bellwether among the 22 states considering stricter privacy provisions, is expected to enact narrowly focused legislation cracking down on identity theft and telemarketing practices.

"We should definitely get movement on [laws addressing] identity theft and the 'do not call' marketing lists," New York State Attorney General Eliot Spitzer said at the moderately attended public hearing Friday in Manhattan.

Mr. Spitzer and New York State Insurance Department Superintendent Neil D. Levin both emphasized the importance of toughening enforcement of existing privacy statutes, along with the need for financial institutions to enforce their own internal policies and controls.

"Rather than enacting more privacy legislation, you are going to see a broader focus on enforcement efforts to ensure compliance," Mr. Levin said.

"What happened with Chase earlier this year makes a point that we need to focus on enforcement," Mr. Spitzer said.

Chase Manhattan Corp. agreed in January to rein in its information-sharing practices after Mr. Spitzer began investigating Chase for selling account information to marketers. Under the agreement, which goes further than federal law, Chase may not share most personal financial information about its credit card and mortgage customers with unaffiliated marketing companies. It may continue to share names, telephone numbers and addresses, provided consumers are given the opportunity to opt out.

"We're not going to support anything less than what we got in the Chase agreement. We see it as a floor, not a ceiling," Mr. Spitzer said, setting a high bar for legislation that he would consider acceptable.

Last week's public hearings were the first step in the Assembly's consideration of whether the state should go beyond the confidentiality safeguards in the Gramm-Leach-Bliley Act. The next step is reviewing testimony submitted.

"I'm not prepared to say at this point what action, if any, we will initiate," said Aurelia Greene, chairwoman of the Assembly's Committee on Banks.

Editor's Note: Each link opens a new browser window. We have no control over the content or availability of sites not part of American Banker Online.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.