The Federal Reserve Board and the Office of the Comptroller of the Currency yesterday unveiled their proposals for regulating bank privacy as required by the Gramm-Leach-Bliley Act. The Federal Reserve, OCC, Federal Trade Commission, Securities and Exchange Commission and other financial regulatory agencies have been hammering out the privacy regulations since Clinton signed the bill into law in November of last year. Their rules will define such specific matters as what types of institutions can be considered financial firms, how banks can word their opt-out statements to consumers and what types of information can be kept confidential.
The OCC's proposal, for example, seeks comment on two alternate definitions of “nonpublic personal information.” One definition includes all information that is provided to a bank by a customer in order to obtain a product or service, or information that is obtained as a result of a transaction with a bank involving a financial product or service, even if that information is available from another public source. The other definition excludes any information that is available from a public source.
The proposal also includes recommendations about how banks should inform consumers about their privacy policies, suggesting that banks that conduct business electronically should employ a system that requires customers to acknowledge receipt of the policy.
Comments on the proposals will be accepted until March 31, after which the agencies will draft final regulations for interpreting the law, which is scheduled to take effect in November. The law allows banks, insurance companies and securities firms that are owned by the same company to share information about each others' customers freely and it requires banks to offer consumers the opportunity to opt out of having their information shared with outside firms.
Meanwhile Sen. Phil Gramm, R-TX, chairman of the Senate Banking Committee, told reporters last week that stricter privacy protections for consumers should not be enacted until the Gramm-Leach-Bliley Act gets a chance to work.