The Debate1 on Privacy in Congress.

The concept of privacy is not a new one. Seventeenth-century British philosopher John Locke believed that privacy was a 'natural right'--one that government was expected to preserve and protect. What renews the privacy debate today is the proliferation of technology that allows for the management of large reservoirs of data.

In this electronic age, information relating to one's financial stature, purchasing preferences, Internet viewing habits, etc., is providing businesses with new, highly accurate and more reliable targets for every conceivable marketing plan. While some consumers might welcome wider access to information about available services, others may be dismayed that information they provide about themselves for one specific purpose is being used by another entity for completely different purposes.

As a member of the House Banking and Financial Services Committee, I became intimately involved in the area of financial privacy. Acting upon a letter that I received from a constituent who was upset about his bank's plan to share his personal account information, I introduced an amendment to the Financial Modernization Act to require that customers be given the opportunity to exclude themselves from information sharing between a financial institution, its affiliates and third parties. Although my amendment was significantly altered at the committee level, it did spark a new debate on financial privacy that resulted in the inclusion of, on final passage of the Gramm-Leach-Bliley Financial Modernization Act (S. 900), a privacy provision allowing consumers to 'optout' of information sharing with unaffiliated third parties.

Another important provision included in S. 900 was the right for individual states to enact tougher privacy laws. This provision made the third party 'opt-out' provision the minimum standard rather than the ceiling of financial privacy protection. If any additional financial privacy legislation is to be enacted in the 107th Congress, you can be assured that much of the debate will be centered on providing a federal preemption for the financial services industry. Companies quickly learned that one privacy standard was much easier--and cheaper to deal with--than 50 varying standards.

It is important to note that the United States does not have a general financial privacy law. I am always amazed when I think that the Fourth Amendment to the United States Constitution, which requires a search warrant for any government agent to access an individual's copy of their personal financial records, does not protect those same records when they are in the possession of a third party, like a bank, insurance company, securities firm, or telemarketer. As the effects of Gramm-Leach-Bliley play themselves out, I am confident that the marketplace will demand more stringent privacy protections.

The 107th Congress will also most likely debate the issues of medical privacy, Internet privacy and privacy from government intrusion, all of which received significant debate in the 106th Congress. On the subject of medical privacy, differences between Congress and the financial services industry seem to be minimal. The House Banking Committee did pass a medical privacy bill that garnered significant support from industry. At issue was the concept of sharing an individual's medical information between affiliates when determining the extension of certain financial services. The committee agreed that one's medical condition, including items such as genetic information, should not be a considered factor in the extension of, ...