Editorial: Prying eyes get their way

Thursday, June 8, 2000 | 11:10 a.m.

Last year the nation's largest financial corporations used their clout to get a sweetheart deal, as Congress passed legislation to sweep aside some Depression-era barriers that regulated their industry. Not only did insurers, banks and brokerage firms get a green light to merge, but they also derailed efforts to stop these newly affiliated companies from sharing with each other a customer's medical records and other personal information.

The megacorporations got what they wanted, but it appears a division among financial companies is emerging, as smaller institutions acknowledge a need for privacy safeguards. This week the American Bankers Association, the Consumer Bankers Association and the Financial Services Roundtable announced voluntary guidelines to protect customer information, including a prohibition on sharing medical information among affiliated companies. The American Bankers Association also said banks should get the consent of the customer before other information is sent to outside companies for marketing purposes. It's encouraging to see some industry groups promote responsible steps, but they'll be severely limited. First, some of the largest corporations refuse to go along with the curbs, which precludes any type of uniformity. Second, even for those companies that pledge to follow the rules, there is no way to enforce what are only voluntary guidelines.

Although it's belated, some legislation is being considered that would prohibit privacy intrusions. Rep. Jim Leach, R-Iowa, chairman of the House Banking Committee, is sponsoring a bill that would require these firms to get a customer's consent before any medical information is released. In addition, the legislation would stop financial companies from using medical records to approve or deny credit, unless the customer gave his consent. Consumers also would have the power to see their health records and, if there were mistakes, could have them corrected.

But Leach's bill only deals with medical records -- he doesn't address the larger picture of financial institutions sharing other information, such as Social Security records and other personal data. If Leach and the GOP congressional leadership were serious about privacy rights, they would incorporate all privacy protections into one bill. Until they do so, individuals will continue to be helpless when it comes to preserving their most intimate information that no one else has any right to see.