Clinton Seeking More Privacy for Consumers
President Clinton on Sunday unveiled a proposal to improve protection of consumer privacy at a time of increasing computerization and consolidation within the financial services industry.
The president’s plan was drawn up to respond to dramatic changes that have allowed banks, insurers and securities firms to integrate their operations within a single financial services conglomerate. It goes beyond legislation Clinton signed in November modernizing the nation’s banking system.
It would, for example, prevent the insurance arm of a financial services firm from sharing information about a customer’s health status with its banking arm unless the customer authorized it to do so.
“We must be able to enjoy the benefits of technology without sacrificing our privacy, to maximize the promise of the Information Age and still protect our individual liberties,” Clinton said.
Clinton presented his plan at the spring commencement of Eastern Michigan University. It would require approval by Congress--an uncertainty at this late stage of his tenure.
Under Clinton’s financial privacy proposal, consumers would have the right to decide whether firms can share information about their accounts with other companies or affiliated firms.
“No one should have to worry that the results of their latest physical exam will be used to deny them a home mortgage or a credit card,” Clinton said.
The plan would require customer approval before an affiliated firm could get access to medical information or spending patterns. It would give consumers the opportunity to review and correct errors in their records and authorize government regulatory agencies to make sure their rights are protected. In addition, it would require a study of the impact that electronic availability of bankruptcy records is having on the privacy of debtors.
According to the White House, the changes within the financial services industry are providing new, potentially cost-saving opportunities for consumers as well as banks, insurance companies and securities firms. But they also present greater risks that privacy can be invaded.
Clinton’s plan is intended, the White House said, to strike a balance between protecting consumer privacy and maintaining the benefits of information sharing, which can aid consumers as well as financial firms if reduced losses bring lower prices.
The president equated the proposal with such measures as antitrust laws, wage and hour laws, unemployment insurance and Social Security that protected workers and consumers as the Industrial Age changed America.
“There are new challenges presented by this new era to our oldest values of freedom and opportunity and community,” Clinton said. “We . . . need new rules for the Information Age to protect those old values just as we did for the industrial age.”
Clinton said individual privacy is being challenged in ways not imagined a few years ago.
“The same genetic code that offers hope for millions can also be used to deny health insurance,” Clinton said. “The same technology that links distant places can also be used to track our every move online.”
But, he added, “we can’t let new opportunities erode old fundamental rights. . . . We can’t let breakthroughs in technology break down walls in privacy.”
Banks, the president observed, are no longer just banks. They are linked to insurance companies, securities brokers and travel agencies, offering convenience, lower prices and greater choices. But this trend, he said, requires a redefinition of financial privacy.
“Today, a financial record isn’t just about what you’re worth. It can paint a picture about who you are,” he said, and it can tell anyone with access to it “what dish you ordered at a restaurant, what clothes you bought at the mall.”
“Today, the law does not prevent firms within a financial conglomerate from sharing information with each other. The life insurance company can share information about your medical history with the bank without giving you any choice in the matter,” and the bank can share information about credit card purchases with a telemarketer, he said.
“I believe that is wrong,” Clinton said. “Your information doesn’t belong to just anyone. Every consumer and every family deserves choices about how their personal information be shared.”
Later Sunday, he spoke at a dinner event in Detroit for the National Assn. for the Advancement of Colored People’s Fight for Freedom Fund.
Addressing about 9,000 guests at the fund’s 45th-annual dinner, the president asked the organization to press the U.S. Senate to move expeditiously on pending judicial nominations, including a number of women and minorities. Some of the nominations have languished for more than a year, often without Senate hearings.
“Vote ‘em up or down. Tell us how you stand. Don’t hide behind no hearings,” Clinton exhorted the Senate.
