Press Release May 7, 1999	Contact:, Mary Griffin 202/462-6262 Consumers Union Washington, DC Office

Washington - The Senate today adopted a massive financial services bill laden with special interest goodies putting at risk America's consumers and taxpayers.

"The Senate bowed to special interests rather than stepping up to the plate for consumers," said Mary Griffin, counsel for Consumers Union. "The Senate missed an opportunity to make the financial services market work for consumers and opted instead to give in to special interest greed."

By a vote of 54 to 44, the Senate passed a financial services bill that will permit banks to merge with investment and insurance firms, creating huge financial "money centers." Consumer laws need to be updated to keep pace with these changes but the Senate did virtually nothing to modernize consumer laws to ensure consumers benefit from the changes. The result - consumers need to be very cautious about dealing with their banks or financial firms because:

· Consumers' Financial Privacy put at Greater Risk: Consumers can expect rampant information sharing and invasions of privacy as the Senate did nothing to curb the ability of financial firms to sell and share consumers' financial information without the consumer's knowledge or consent . The bill fails to given consumers the ability to say "no" before information about their accounts or experience with financial firms is shared or sold.

· Consumers can Expect more Price Gouging: The 12 million unbanked families and the 48 million households that keep $1000 or less in their accounts who are nickle-and-dimed to death by ever-increasing fees get no reprieve because the Senate failed to enact low-cost basic bank accounts to make traditional bank accounts accessible to all Americans in need.

· Consumers Purchasing Insurance from Banks are at Risk: While the bill includes a package of safeguards to prevent confusion and deceptive practices when banks sell non-FDIC insurance products, they have no teeth. So, when consumers lose money when banks violate the rules, they have no recourse under this law. Further, it allows states to override these safeguards with less protective measures, undermining the intent and effect of the package.

· Investors Purchasing from Banks still at Risk: The bill essentially retains the outdated exemption of banks from securities laws, leaving investors purchasing securities from banks without protections and the ability to arbitrate grievances and recover their losses. This means that when a bank misleads a customer, selling him or her a completely unsuitable product, e.g, an aggressive growth mutual fund sold to a retired senior on a fixed income, the customer cannot get their losses back as other investors would have a right to do.

· Communities at Risk: The bill rolls back the Community Reinvestment Act (CRA), making it harder for communities to ensure that their deposits will be put back in their communities. Securities and insurance affiliates are clear of any "Community Reinvestment Act"- like obligations to communities, which are needed, particularly in low and moderate income areas.

· Taxpayers Exposed to Massive Risks: The bill opens wide the ability of banks to own commercial firms like steel or auto or hi-tech companies, creating the risk of huge economic concentration and skewing the availability of credit. The s&l crisis will look like a little blip compared to the kinds of losses that could be in store for taxpayers if this bill is enacted.

· The Hands of States to Protect their Residents are Tied: The ability of states to apply consumer laws to national banks is put more at risk under this bill. This bill creates new preemption standards that let banks trample on the authority of states to enact and enforce consumer laws.

Consumers contemplating purchasing financial services from these mega-institutions that will proliferate if this bill is enacted are advised to use the utmost caution and shop around because their privacy and pocketbooks are at risk. The bill would open wide the door to more invasions of privacy, deceptive practices, and price gouging.