January 22, 1999

The Honorable Paul Sarbanes
United States Senate
Washington, D.C. 20510

Dear Senator Sarbanes:

We are writing to offer our support for the "Financial Information Privacy Act of 1999" (S. 187) you introduced to help protect consumer financial privacy. As you know, we share your concerns about financial institutions sharing information about their customers without customers' having control over whether the information is shared or access to the information. The bill represents a positive first step toward protecting the privacy of financial information. Our organizations believe that such protections need to be enacted, regardless of whether the Congress completes action on financial modernization proposal.

Current banking law provides very little privacy protection. The recent merger of Citicorp and Travelers highlights the need for protections as mega-financial institutions are free to share or sell much information about their customers, often without the knowledge or consent of the customer. In addition, once financial institutions share information with their affiliates, affiliates are free to use the information for marketing or decision-making purposes without any protections for the consumer. The bill addresses part of this problem by directing federal regulators to develop rules relating to certain information about deposit and other accounts, CDs, securities holdings and insurance policies. The bill would ensure:

• Confidential customer information is not disclosed or shared with third parties unless the customer has given their prior written consent;
• Customers have the right to say no to institutions sharing information about them with their affiliates;
• Customers have access to the information to review for accuracy
  

While the legislation is a first step toward financial privacy for consumers, there are additional important protections that need to be included if we are to ensure that financial institutions meet basic fair information practice standards. For example, the bill contains no provisions to ensure that financial institutions are liable to consumers for violations of the law. Without accountability, there is little incentive for financial institutions to comply with the law. Also, any confidential financial information that is personally identifiable should not be shared without the prior consent of the customer. In addition, financial institutions must have an affirmative obligation to guard against threats to security and privacy of data. We look forward to working with you to address these issues as this legislation moves forward.

We commend you on your leadership on financial privacy and hope Congress enacts privacy protections this year.

Sincerely,

Ken McEldowney Consumer Action	Jean Ann Fox Consumer Federation of America
Mary Griffin Frank Torres Consumers Union	Beth Givens Privacy Rights Clearinghouse
Evan Hendricks Privacy Times	Edmund Mierzwinski U.S. Public Interest Research Group (US PIRG)

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