The California General Assembly, in one of its last acts before adjourning, failed to pass the Financial Information Privacy Act (S-773), which exceeded existing federal law.
The bill, previously approved by the California Senate, was defeated by a vote of 36 to 35, with nine abstentions.
Democratic Sen. Jackie Speier, who sponsored the controversial measure, immediately won the Senate’s approval, 33-1 with six abstentions, to remove it from further legislative consideration. But Speier told reporters she intends to introduce a tougher financial privacy statute next year.
S-773 would have required that banks and other financial institutions obtain a customer’s written authorization before sharing their personal information with third parties for marketing purposes. That would include affiliates.
It also would have mandated that California’s financial institutions send clear and easily understood written notices to their customers regarding matters involving their privacy rights.
Moreover, S-773 would have obliged that the attorney general’s office approve all federally required privacy notices sent to consumers.
Speier attributed the bill’s defeat to Gov. Gray Davis, business-friendly Democrats, Republicans and the state banking industry.
Meanwhile, there are growing reports that consumer advocates led by Consumers Union will soon launch a petition to have the issue placed on the November 2004 ballot.
The state’s banking and financial industry is expected to mount an all-out campaign for a federal measure that would prohibit states from adopting financial privacy laws or rules that go beyond the protections contained in the 1999 Financial Services Modernization Act.
That law — also known as the Gramm-Leach-Bliley Act — allows banks, insurance companies, securities firms and other financial institutions to merge and offer competing products and services. It also compels them to provide customers with privacy notices and the right to opt out of having their personal financial information shared with third parties for marketing purposes.
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