Senate OKs Privacy Bill

The Senate on Tuesday gave final legislative approval to a compromise bill that would prohibit banks and other businesses from selling a customer’s most intimate financial information without permission.

Gov. Gray Davis pledged to quickly sign it into law.

The 31-6 vote came without debate and capped a four-year campaign by Sen. Jackie Speier (D-Hillsborough) to give consumers a bigger voice in controlling the use of their personal data by major California and national financial institutions, many of which fought hard to block such a measure.

“It was a long time coming but worth the wait,” said Speier, considered one of the most tenacious legislators in Sacramento.

In the midst of an intensifying recall campaign against him, Davis, who had sided with business interests in defeating earlier versions of the bill, SB 1, abruptly reversed himself last month and announced his support for the latest plan. Polls show Californians to be strongly in favor of tougher privacy protections.

As soon as business interests reached a settlement with backers of the bill last week, opposition all but vanished in the Assembly and melted substantially in the Senate. Six Senate Republicans joined majority Democrats in voting for the bill Tuesday, although each dissenting vote was cast by a GOP member. The bill first cleared the Senate in March on a 23-6 vote.

Both houses acted in less than 48 hours to approve the compromise, which emerged from three weeks of intense negotiations between consumer activists and business interests.

Californians for Privacy Now, which had threatened to place an even stricter financial privacy initiative on the March 2 ballot, had given the Legislature until midnight Tuesday to approve the bill. If the deadline was not met, they had promised to file this morning the nearly 600,000 signatures they had collected to put their plan before voters.

In a floor speech Tuesday, Speier credited those voters with forcing the Legislature to finally pass a financial privacy bill. She told colleagues that overwhelmingly Californians believe that “financial privacy is a right. It is our duty to protect that right.”

Speier, whose bill passed the Assembly with only one “no” vote Monday, said her legislation not only would protect citizens from identity theft but would be “the toughest, the strongest consumer protection measure for financial privacy in the country.”

In addition to banks, the bill would apply to such financial-services businesses as insurance carriers, credit unions, stockbrokers, credit card companies and others. They would have to receive a customer’s written permission on a special postage-paid form before the customer’s private data could be sold to a third party, including direct marketers.

Unless the customer objects, a financial institution could still share details of his or her financial history, including name, address, phone number, Social Security number, annual income, debts and bank account balance, with its wholly owned subsidiaries -- provided they were in the same business, under the jurisdiction of the same state regulator and shared the same brand name. Inclusion of this provision was a big win for the business negotiators.

But even as the Speier bill passed, a new controversy emerged when Sen. Liz Figueroa (D-Fremont) charged that Assembly Speaker Herb Wesson (D-Culver City) and the banking industry had apparently struck a deal to kill a related measure that she is sponsoring. That bill, SB 27, is pending on the Assembly floor.

A spokeswoman for Wesson and James Clark, lobbyist for the banking group, denied that there was any such agreement.

Figueroa’s bill would require any business that shared a customer’s confidential information with any third party to provide -- on the customer’s demand -- a description of the released data and the names and addresses of the recipients.

Under the alleged agreement, Figueroa said, Wesson and the banks decided that the Speier bill would be the only one of its type to win Assembly approval this session and that the Figueroa bill would be amended over her objection to exempt banks.

Clark said the banking industry from the outset had opposed being regulated under more than one set of rules and had told Figueroa.

“The financial institutions will be willing to adopt one new privacy standard, but not two,” he said.

Since the Legislature has approved the Speier plan, Clark said, “we don’t think we need another overlay of privacy law.”