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Press Release |
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WASHINGTON - During an appearance before the House Banking Committee Thursday, Consumers Union urged Congress to not permit "modernization" of the banking industry to move forward without addressing the concerns everyday consumers have about protecting their privacy and their wallets.
"As you break down the walls that separate banks and insurance and securities firms, we urge you to ensure the market serves the needs of all consumers and not simply cater to the wealthiest," said Mary Griffin, Insurance Counsel at the Washington, D.C. office of Consumers Union, publisher of Consumer Reports. "Consumers have been redlined for years and now they're being 'red-lighted'. That is not acceptable."
Griffin told the panel about published accounts that one banking outfit -- First Union -- actually tracks more desirable high-end customers from those of more modest means by arming their employees with a tracking device which alerts them to the consumer's financial status by secretly flashing a red, yellow or green light. Those who receive the green light beg good deals and fee waivers, while red lighted customers get the shaft, she explained.
The financial services modernization proposal offered by Rep. Jim Leach, R-Iowa, falls short of protecting consumers and is missing key provisions that would help tip the balance of the bill more toward consumers. For example, there is no provision to provide low-cost accounts in exchange for limits on transactions that was in last year's measure. There is a package of protections to help prevent misleading and deceptive practices by banks when they sell investment and insurance products, but these need to be stronger. There are also no privacy protections to ensure consumer have control over their financial data.
In describing the lack of privacy provisions, she cites a disturbing loophole in the Fair Credit Reporting Act that could be exploited by mergers like the Citicorp-Travelers company.
"Not only can Citigroup affiliates share financial information about their over 90 million customers to use for cross marketing, in many cases without the customers' knowledge or consent, but they also can pool data and create their own databases without coming under the law," she told the panel. Griffin hopes Congress will wake up and step up to the plate for consumers.
NOTE: For a full copy of the testimony, please dial our faxback line at 202/238-9258 and request document number 3307.
