Editorial: Privacy shouldn’t be left out

Thursday, Oct. 21, 1999 | 9:24 a.m.

The House, Senate and White House are trying to iron out their differences on a bill that would overhaul the nation's financial services laws. The legislation would end Depression-era laws that prevent banks, securities firms and insurance companies from merging. A legitimate concern about permitting these mergers, however, is that the newly joined companies could swap extremely personal information about a customer without the individual's consent.

Unfortunately initial indications are that the negotiations between the Clinton administration and the congressional leadership will not include in the legislation provisions that adequately preserve privacy rights. Details of the emerging final package still are sketchy, but on Tuesday White House spokesman Joe Lockhart signaled that the administration could live with the privacy provisions in the House bill. The House's privacy protections are weak, though, and wouldn't stop the sharing of customer information among banks, securities firms and insurance companies that are affiliated.

It also is disturbing that proposals endorsed by consumer and privacy groups have been rejected by the House-Senate conference committee that is attempting to reconcile the competing legislation. The conference committee, mostly along a party-line vote, defeated a Democratic-backed amendment offered Monday by Sens. Richard Bryan, D-Nev., and Richard Shelby, R-Ala., that would have required financial institutions to get permission from a customer before any personal information was shared with affiliated companies or outside third parties.

Bryan appropriately summed up on Tuesday some of the real world issues that will be faced by consumers if strong privacy protections aren't enacted: "Would you want your insurance company telling your mortgage loan officer that your wife was just tested for a terminal illness? Would you want your bank simply selling your personal financial information to the highest bidder?" The intent of the comprehensive legislation is to allow for the growth of financial services companies, but consumers will be the losers if a new law doesn't require a customer to first give his permission before sensitive information about his private life is shared with another company. This is an instance where it is better to leave existing financial services laws in place rather than create new legislation that jeopardizes privacy rights.