Originally created 05/07/99

Senate adopts privacy measure

WASHINGTON -- Aiming to protect consumers' privacy, the Senate on Thursday overwhelmingly adopted a measure that would make it a federal crime for anyone to misrepresent himself to obtain someone's private financial data.

The vote was 95-2 for the amendment to sweeping legislation the Senate is crafting that would let banks, securities firms and insurance companies get more deeply into each other's businesses.

The measure responded to Americans' growing concern over privacy in an era of consolidations creating huge financial institutions selling everything from checking accounts to mutual funds.

The action on the proposal of Sen. Phil Gramm, R-Texas, chairman of the Senate Banking Committee, followed a request to Congress by President Clinton earlier this week to bolster consumers' financial privacy.

"Americans have become increasingly concerned about the issue" of privacy, said Sen. Paul Sarbanes of Maryland, the banking panel's senior Democrat.

Although almost all senators backed the privacy provision, the broader bill was the subject of extensive debate Thursday.

Sen. Byron Dorgan, D-N.D., called it "exactly the wrong bill at exactly the wrong time. ... This is moving this country in the wrong direction."

Removing the Depression-era barriers separating banks, brokerage firms and insurers would increase the likelihood of future taxpayer bailouts of big institutions that fail, Mr. Dorgan warned.

"This orgy of big bank mergers in our country moves now at an accelerated pace, unabated." he said. He cited recent consolidations including those in which banking giant Citicorp merged with brokerage-insurer Travelers Group in a deal valued at $36.9 billion, NationsBank Corp. and BankAmerica Corp. combined in a $41.5 billion marriage, and Banc One Corp. and First Chicago NBD Corp. united in a $18.7 billion deal.

Proponents of the financial overhaul legislation maintain it is needed to keep the U.S. financial industry competitive in global markets and that it would save consumers millions by providing one-stop financial shopping.

The Clinton administration supports such legislation in principle. But in a showdown with Mr. Gramm, it has threatened to veto the Senate bill unless there are major changes, notably the removal of provisions that Democrats view as an attack on the 1977 Community Reinvestment Act.

In a setback for the administration Wednesday, the Senate defeated, 52-45, an amendment that would have removed the provisions.

The privacy amendment takes aim at the practice of pretext calling, in which people call employees at banks and other businesses and use Social Security numbers to get information about bank accounts and other financial data.


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