House OKs financial privacy

Jonathan Lipman

Friday, July 2, 1999 | 3:59 a.m.

LAS VEGAS LAWSUITS

Three big banks operating in Las Vegas were hit with lawsuits last month alleging they provided personal information about customers to third parties.

Bank of America and Wells Fargo were sued in California by a consumers advocacy group that said they sold customers addresses, Social Security numbers and other information without disclosing this to customers. Wells Fargo merged this year with Norwest Bank.

B of A and Wells Fargo said they would stop or limit the sharing of customer information to third parties.

And this week, U.S. Bank's owner, U.S. Bancorp, agreed to pay states and charities $3 million to settle a privacy lawsuit filed against it by the attorney general of Minnesota. The bank provided about its customers including occupation, marital status, account balances and Social Security numbers, the suit alleged.

WASHINGTON -- The House on Thursday passed a measure to make it harder for banks to sell information about their customers to telemarketers and outside parties, but Sen. Richard Bryan doesn't think the legislation goes far enough, his spokesman said.

The measure -- passed 427 to 1 as an amendment to a larger House financial modernization bill -- is weaker than legislation Sen. Richard Bryan, D-NV, tried to include in a Senate bill in May, his spokesman said.

The House amendment, sponsored by Rep. Michael Oxley, R-Ohio, would allow costumers to forbid their banks from sharing information with telemarketers and other third parties not affiliated with the bank. But companies affiliated with the bank, such as insurance companies, would still have rights to the information.

"I think that Senator Bryan would like to see a bill with stronger privacy provisions, like the one he proposed in the Senate," said Bryan spokesman David Lemmon. "With recent bank mergers, 95 percent of Nevada does its banking with three banks. So there's a greater chance of your information going who knows where."

Bryan's admendment would have required banks to get a customer's consent before sharing information with telemarketers and non-affiliated third parties. It also called for a customer's right to forbid information sharing with companies affiliated with the bank.

Bryan withdrew his amendment last spring from the Senate financial modernization legislation because he thought adding too many provisions might doom the larger bill, Lemmon said. The Consumers Union, publisher of Consumer Reports magazine, criticized the House legislation. The legislation is "riddled with loopholes" and ineffective because it is tacked onto a bill that generally removes regulations from the banking and insurance industries, said Consumers Union spokesman David Butler.

President Clinton supports privacy protections, but the House amendment "does not address all the issues involved" and the administration will seek additional protections, a White House statement said.

Peggy Peterson, a spokeswoman for Oxley, defended the House measure.

"This is going to be the first time ever the companies are going to be required to have full disclosure. In addition, we tried to target what people are most concerned about," she said, referring to telemarketers and other outside parties getting access to financial information.

Bryan, along with Senator Paul Sarbanes, D-Md., has introduced a more comprehensive financial privacy bill, but there is no action scheduled for that bill anytime soon, Lemmon said.