Just after President Clinton signed the Gramm-Leach-Bliley Act of 1999, American Bankers Association president Hjalma Johnson issued a bold challenge to bankers: Within 100 days adopt and disclose plain-English policies that explain what information is collected about customers and what the bank does with it.
The new law mandates such actions and requires banks to give customers a chance to block data sharing with unaffiliated companies. Realizing tougher privacy measures would be attempted, Mr. Johnson urged the industry to take the offensive.
Today is the deadline.
"I admit my challenge was not met," he said in an interview last week. "It was too ambitious on my part, knowing that regs were not even going to be out by now."
Mr. Johnson said most banks want to see the final privacy rules, expected in mid-May, before adopting and disclosing their policies to customers. "I would say the vast majority of banks have elected to give it more time to get it right, or as right as they can, the first time."
But the gregarious Floridian has no regrets. "I'd rather aim high and miss, than aim low and hit."
To make room for insurance and securities executives, the Financial Services Roundtable is adding five seats to its board and a vice chairman to its elected officers.
The group, which is trying to broaden its membership, was expected Saturday to name as vice chairman Edward B. Rust Jr., chairman and chief executive officer of State Farm Automobile Insurance Co.
Wachovia Corp. chairman and CEO Leslie M. "Bud" Baker was expected to be elected chairman, succeeding Robert Gillespie, chairman and CEO of KeyCorp. Comerica Inc. chairman, president, and CEO Eugene A. Miller was expected to be elected chairman-elect.
The five nonbank companies expected to win spots on the roundtable's board are USAA, American General Financial Group, Ford Motor Credit Corp., ReliaStar Financial Corp., and Credit Suisse First Boston. Fourteen nonbanks have joined the roundtable in recent months; its total membership is now 88.
Comptroller of the Currency John D. Hawke Jr. insisted that no power was ceded to the Federal Reserve Board with the passage of the Gramm-Leach-Bliley Act.
" 'Umbrella supervisor' is a new description for what the Fed has been doing for the last 25 years," Mr. Hawke said last week in a speech to the New York Bankers Association.
While the Fed will continue to regulate bank holding companies and the new conglomerate financial holding companies, Mr. Hawke said its oversight of securities and insurance activities are limited. The Fed will also have to defer to the primary federal or state supervisor when looking for information on banks.
"The new law used stronger language than has ever been used before in this context in order to underscore its intention that the role of the primary regulator not be needlessly duplicated, and that the burdens of regulation on banks be kept to the absolute minimum," Mr. Hawke said.
A. Smith Jr., general counsel of Centura Banks Inc. in Rocky Mount, N.C., is joining the Washington office of Thatcher, Proffitt, & Wood this month. Mr. Smith plans to help the law firm expand its financial services practice by advising banks and thrifts on taking advantage of new securities and insurance powers in the Gramm-Leach-Bliley Act of 1999.
