ACLU Calls on House Panel to Protect Financial Privacy
FOR IMMEDIATE RELEASE
Tuesday, July 20, 1999
WASHINGTON — As a House panel held hearings on financial privacy, the American Civil Liberties Union today called on Congress to enact new financial privacy protections and repeal existing anti-privacy laws.
Today’s hearings before the House Banking and Financial Services Committee were called only weeks after a contentious battle on the House floor about financial privacy during debate over a major overhaul of the financial services sector.
As mergers of large financial institutions become widespread, the ACLU said, there is a pressing need to enact legislation to prevent large conglomerates from distributing customers’ financial information among their subsidiaries. Information given to an insurance company in connection with a medical claim, for example, should not be used by an affiliated bank to deny a loan.
“Customers should have the right to decide whether their financial information — such as what kind of medicine they purchase with their credit cards — is shared with all of the companies affiliated with their bank,” Nojeim said. “The practice,” he continued, “of sensitive personal information being submitted for one purpose and then being used for another will become more widespread unless Congress acts to stop it.”
The House hearings also come only a few months after bank regulators withdrew proposed “Know Your Customer” regulations. The proposed regulations would have made even more intrusive existing bank regulatory practices that require banks to monitor their customers’ financial transactions, develop customer profiles and report to the government large transactions.
“The 250,000 people who told bank regulators to withdraw the “Know Your Customer” regulations have demanded that their financial privacy be protected,” said Gregory T. Nojeim, an ACLU Legislative Counsel. “Congress has a clear mandate from the American public to protect their financial privacy.”
A survey by the American Bankers Association found that 86 percent of responding banks already had “Know Your Customer” programs or policies in place as of 1990. The Federal Reserve has pressured banks to “voluntarily” adopt such programs even if they are not required to do so, Nojeim said, adding that Congress must repeal the statutory basis for the “Know Your Customer” regulations.
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