A Dec. 5 Business article incorrectly described the status of the Fair Credit Reporting Act. It should have said that a provision of the act preempting state laws on privacy protection-not the act itself-will expire at the end of 2003. (Published 12/6/02)
The new head of the Senate Banking Committee plans to reopen the question of how best to protect the privacy of financial information when key consumer credit legislation expires next year.
In a speech today to the nonprofit Consumer Federation of America, Sen. Richard C. Shelby (R-Ala.) plans to reiterate his long-held view that consumers deserve much more privacy protection than they were given a few years ago in a law that deregulated the financial services industry, the senator's spokeswoman, Andrea Andrews, confirmed yesterday.
The difference now, many business executives say, is that Shelby will have more power to promote his view when his party becomes the majority in the Senate when the new Congress convenes in January.
Although there are no plans to revisit the deregulation act, another piece of legislation that deals with privacy -- the Fair Credit Reporting Act, which governs how the nation's three major credit agencies collect and disseminate information about consumers -- will expire at the end of next year. That will require that lawmakers revisit the privacy issue, particularly the part of the law that preempts state laws on the subject, Shelby will say in the speech.
The speech, according to sources familiar with what Shelby plans to say, will be Shelby's most detailed public statement to date of how he envisions running the committee, which has oversight of financial-services agencies, including the Securities and Exchange Commission, the Federal Reserve Board and the Department of the Treasury.
Shelby's views on privacy have put him at odds with the business community and with many fellow Republicans who favor allowing insurers, bankers and securities brokers to share financial information, such as consumer spending patterns, among themselves and with other retail industries.
Industry officials argue that they need easy access to individual financial data to better serve consumers with the products and services they want and need. Consumer groups argue that industry demands too much information, and often uses it unfairly, while at the same time fighting against giving consumers better information, such as how much interest someone pays over the life of a credit card bill by paying only the minimum balance due each month.
Shelby also will say that he will make oversight of the SEC's implementation of the Sarbanes-Oxley Act a top priority, sources said. Congress passed the bill in July in response to the accounting scandals at Enron Corp., WorldCom Inc. and other companies. To restore investor trust in the securities markets, Congress must fully implement the law's provisions, he will say. In addition, Shelby will argue that President Bush must nominate a strong SEC chairman who is independent from the White House and other political pressures.
Andrews, Shelby's spokeswoman, said the senator was not available for comment and that copies of his speech would not be available until today.
Researcher Richard Drezen contributed to this report.