NYT: Congress Is Close To Eliminating A Privacy Law

[CShine]

Congress is poised to pass a law that would strike down groundbreaking rules in California intended to give people the power to stop banks, insurers and brokerage firms owned by the same company from swapping their financial secrets.

The effort, spurred by banking lobbyists, is part of a broader push by the financial services industry for legislation that would permanently abolish state and local laws that could give consumers greater control over their private financial information. Federal law already includes broad provisions pre-empting state and local financial-privacy regulations, but the existing law is set to expire at the end of this year unless Congress passes new legislation.

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The California law was passed with wide bipartisan support in Sacramento two months ago after corporate lobbyists who had derailed similar legislation before were cowed by strong public support for a proposed referendum that would have established a tougher state law. Privacy advocates, concerned about the growth of financial institutions that operate many lines of business under one roof, had hoped other states would follow California's lead by limiting how these companies can use personal financial information.

But legislation is expected to make it to the Senate floor as soon as next week that would pre-empt much of the California law and prevent other states from taking similar steps. The bill was approved unanimously in the Senate Banking Committee last month, but Senators Dianne Feinstein and Barbara Boxer, both California Democrats, have proposed an amendment that would adopt the California rules nationally. They also propose extending the current federal law by only one year, to give Congress more time to review the issue.

http://www.nytimes.com/2003/10/25/business/25PRIV.html