Under pressure from the financial services industry, House Republican leaders are spearheading an effort to delete a provision in the pending financial services overhaul bill that would give consumers new authority to stop banks, brokers and insurers from sharing customer information among affiliates, according to industry and government sources.
The House Commerce Committee had adopted the provision last week. The bill would make it easier for banks, securities firms and insurers to merge with one another and share information among affiliates to market new services and products.
Since the Commerce Committee met, though, industry lobbyists have said they will oppose the bill if the privacy provision is not removed, sources said.
Industry leaders argue that allowing consumers to ban the sharing of information effectively defeats the purpose of merging banks, brokers and insurers. The overhaul bill the industry has been pushing would allow those mergers to take place more easily and allow the resulting companies to cross-sell products without the hindrance of Depression-era laws that severely limit how closely financial companies can mingle banking, brokerage and insurance products.
Rules Committee Chairman David Dreier (R-Calif.), Commerce Committee Chairman Thomas J. Bliley Jr. (R-Va.), House Banking Committee Chairman Jim Leach (R-Iowa), House Speaker J. Dennis Hastert (R-Ill.), and other top House Republicans and their staffs have been in one meeting after another in the past two days to try to come up with a solution to the privacy question.
It's not only Republicans who are involved. Rep. Martin Frost (D-Tex.) has been working to craft language on the issue that everyone can accept, including the Democrats on the Commerce Committee who originally sponsored the privacy provision -- Reps. John D. Dingell (Mich.) and Edward J. Markey (Mass.).
"What they [the leaders] are proposing is a travesty. It fails to give consumers a meaningful right to say no to financial institutions transferring their most personal financial information," a Markey spokesman said.
The meetings are part of a larger discussion on how to reconcile the Commerce Committee's version of the overhaul bill with a version the Banking Committee passed earlier this year so that a final bill can be sent to the House floor next week.
David Runkel, spokesman for the House Banking Committee, was rankled at suggestions that the effort to change the affiliate sharing provision was primarily a Republican effort.
"The privacy issue remains open for discussion by Republicans and Democrats," Runkel said. "There are bipartisan efforts to come up with language acceptable" to the industry. And he noted, as many other congressional staffers and lobbyists did, that no final decision on the issue had been made.
Republicans have made one key decision, sources said: The bill that goes to the House floor will give the Treasury Department and the Federal Reserve Board joint oversight of the nation's banking companies. That's the position favored by the House Banking Committee and the White House. The Commerce Committee favored making the Fed the primary bank regulator.