*Senate Committee Postpones Votes on Bank Privacy Bills

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A California Senate committee yesterday postponed voting on two bills that

were seeking to give consumers more control over the information that

financial services have about them. The bills were seen as strengthening the

privacy protections in the federal financial modernization law, the

Gramm-Leach-Bliley Act, which is scheduled to take effect later this year.

One of the bills, introduced by state Sen. Tim Leslie, was amended so that

it no longer requires banks to use an opt-in method for obtaining customer

permission to share information. Instead, it would allow an opt-out method,

in which banks could share customer information with affiliates and third

parties unless specifically asked not to do so by customers.

Jedd Medefind, a spokesman for Sen. Leslie, said the amendment imposes

strict requirements on the formats banks and other financial companies can

use to present the opt-out opportunity to their customers. The

bills were hotly debated for several hours by members of the Finance,

Investment and Trade Committee, he said, before the decision was made to

table the measures for an April 26 vote.

"The basic voice from the banks was what they've been saying all along, that

this is going to hamper commerce and make it difficult to provide good

service," he said.

Sen. Jackie Speier originally introduced the other Senate bill, which was

less inclusive in terms of what companies were considered financial services

firms and included larger penalties for violations.

Another opt-in financial privacy bill in the California Assembly is scheduled

for an April 24 vote in the Assembly Banking Committee.

Direct marketers generally favor the opt-out method of securing customer

permission, because it tends to make more customer information available for

marketing offers. The legislation is being closely monitored around the

country because several other states also have introduced similar financial

privacy bills and are watching to see the outcome in California.

You have until Wednesday, December 7 to get your entries in. Learn more here.

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