Davis Halts Release of Confidential Data

A state agency’s plan to sell confidential salary information about California residents to lenders and creditors was blocked Friday by Gov. Gray Davis, who said releasing the data would violate the trust and privacy of citizens.

In a letter to his newly appointed director of the state Employment Development Department, Davis ordered the agency to halt its efforts to sell the information to private companies.

“I believe a state agency entrusted with confidential personal information on millions of its citizens . . . has a responsibility to protect the privacy of those citizens,” Davis wrote. “The wholesale distribution of such information on the open market, in my view, would violate that trust and the privacy of those individuals.”

Davis said he would reconsider the issue after the EDD conducts a full review of the proposal’s merits and risks, but his aides said it was unlikely that the governor would change his mind and permit the sale of the information.

Davis also asked state legislators to reconsider a 1998 law that authorized the EDD to sell the data in the first place.

The controversial program--first reported Thursday in The Times--was expected to begin later this year or in early 2000.

The EDD was planning to sell banks, lenders and information companies electronic access to the records it keeps on how much Californians earn each year. Mortgage lenders expressed the most interest in the information, which they said would enable them to reduce fraud and process loan applications faster and cheaper.

But consumer groups and privacy advocates said the state had no business selling the data and warned that it could be misused if it fell into the wrong hands, such as marketers, retailers or bill collectors.

State Sen. Debra Bowen (D-Redondo Beach), one of only three legislators who voted against the proposal, praised Davis’ prompt action in stopping the sales before any records were released.

“It’s nice to be able to close the barn door before the horses get out,” Bowen said.

She and several other state legislators said they plan to sponsor legislation to permanently revoke the EDD’s authority to sell the data. That authority was granted by AB 604, a bill carried by then-Assemblyman Steve Kuykendall, who was elected to Congress in November. The bill won unanimous approval in the state Senate.

EDD Director Michael Bernick said Friday that the agency would reconsider its implementation of the program in light of Davis’ comments.

“We are taking a fresh look at this whole thing,” Bernick said, adding that the program was launched by his predecessor, an appointee of former Gov. Pete Wilson.

The EDD stood to collect up to $15 million over the next 10 years by selling electronic access to the wage figures, which it collects on about 14 million Californians as part of its administration of unemployment insurance.

The EDD was planning to release a study later this month reviewing how similar programs have worked in other states, but that release likely will be delayed, Bernick said.

Officials at Poway-based Verification of Income and Employment, or VIE, which had been working with the EDD to implement the program, declined to comment Friday.

VIE, a joint venture between Santa Ana-based First American Financial Corp., and Norwest Mortgage, administers similar programs in five other states.