Financial Privacy Legislation Scheduled for Senate Vote
The bill, which creates rules by which banks, insurance companies and securities firms can enter into each others' businesses, has been renamed the Gramm-Leach-Bliley Act and includes privacy provisions favorable to direct marketers.
It requires that banks disclose to consumers what information about them will be shared with affiliated divisions and with unaffiliated third parties, and requires that banks give consumers the opportunity to opt out of having this information shared. This "opt out" opportunity must be presented to consumers in a "clean and conspicuous" manner at least once a year.
Although the bill does not allow customer account numbers to be shared with third parties for marketing purposes, wording was inserted that allows banks to provide encrypted account numbers to marketers if a customer has "expressly authorized" this disclosure and if the information is necessary "to service or process a transaction expressly requested or authorized by the customer."
The bill also stipulates that banks are subject to more stringent privacy provisions at the state level.
Christi Harlan, a spokeswoman for the Senate Committee on Banking, said the bill is expected to pass the Senate easily today, after which it will come before the House. Representatives for President Clinton have indicated that he will sign the measure, which was drafted from separate bills introduced earlier this year in the Senate and House, S.900 and H.R.10, respectively.