Legislation increasing the financial privacy of Californians was revived last week by Banking and Finance Committee of the General Assembly less than a month after it had rejected the measure by an 8-2 vote.
The panel, in a reconsideration vote, approved Senate Bill 773, which would require banks, financial institutions and insurance companies to obtain a customer’s written authorization before sharing their personal, non-public information with affiliated or non-affiliated third parties. The measure passed 5-3 with two abstentions.
Immediately after the vote the committee chairman, Democrat Assemblyman Lou Papan, said the legislation was “a significant improvement over current [state] law and may prove to be a national model” for personal financial information privacy protection.
The bill, which the Senate passed 25-13 in June, now goes to the Business and Professions Committee, chaired by Democrat Assemblyman Lou Correa, and the Judiciary Committee, led by Democrat Assemblyman Darrel Steinberg, for consideration. There was no indication of just when the two panels would consider the bill.
The bill’s author, Democrat Senator Jackie Speier, credited the public with forcing the Assembly committee to reverse itself. “I have to believe that the people speaking out made the difference,” she said, noting that the issue of personal privacy, endorsed by Gov. Gray Davis, has been hotly debated in the legislature where several similar bills are pending.
Speier’s bill is just one of several financial privacy measures lawmakers in several states are considering that conflict with the two-year-old Federal Financial Services Modernization Act.
That law revised the nation’s financial industry by allowing banks, financial institutions and insurance companies to merge and offer consumers competing products and services. It also permitted them to provide third parties with information about their clients and customers unless they chose to “opt out” of having their information shared with anyone.
It additionally requires third parties receiving that information to take “reasonable steps” to maintain its privacy. Violators could face civil and criminal penalties.
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