THE WHITE HOUSE|
Office of the Press Secretary
For Immediate Release
April 30, 2000
PRESS BACKGROUND BRIEFING
SENIOR ADMINISTRATION OFFICIALS
ON FINANCIAL PRIVACY
Aboard Air Force One
En route Ypsilanti, Michigan
11:55 A.M. EDT
SENIOR ADMINISTRATION OFFICIAL: Hi. Let me just briefly set this
up. The President, in his remarks today, is going to talk about how
we're entering the Information Age and, yet, even today, we need to
establish rules of the road that will protect American core values in
this era, just as we did in the Industrial Era before it.
And so he will give illustrations of a couple of different core
values, and he'll really challenge the young people that this is their
responsibility to find ways to protect those values.
The central issue that he'll talk about, and where I think we're
making some news today, is on the area of financial privacy. Last year,
the President signed the Financial Modernization Act, the
Gramm-Leach-Bliley Act in November. And that bill contains some
important financial privacy protections, really, for the first time.
But the President made clear as he signed that bill that he thought
those provisions did not go far enough, and directed the Treasury
Department, NEC and OMB to develop a plan to protect more
comprehensively Americans financial privacy.
This bill that he is announcing today and which he will send to
Congress next week -- the Treasury Secretary will transmit -- is a
fulfillment of his commitment to go further to help protect American
consumers financial privacy. The central concept he embodies is that
Americans should have the ability to control how their information is
used by the firms that provide them financial services. And, depending
upon how sensitive the information is, greater protections and more
control is appropriate. And that's the central theme that will run
throughout all of the proposals that we'll talk about.
The only other general point I'd make before I turn it over to my
colleague is that public interest in this issue continues to grow, the
momentum on this issue grows. Last year, when we considered financial
modernization legislation we announced our proposal in May, and the
President had a proposal last year that this goes further than. No one
thought that there would be -- and many members of Congress said there
would be no legislation on the subject last year. And, yet, only six
months later, Congress adopted a good first step in the process.
So we would say to those who are skeptical about legislation that
the momentum on this topic is only going in one direction. And the
President today is going to challenge the Congress to do what we think
most Americans want them to do.
SENIOR ADMINISTRATION OFFICIAL: As my colleague said, the
President is committed to what I think all Americans want, is an ability
to choose how their information is used in the financial world.
Many things have changed. I was just going to say three things
have changed. Technology has changed, as we know, but also there is
consolidation that banks, securities firms, insurance firms can come
together now in one conglomerate. And the third thing that has changed
is we are less are a cash society and more electronic payment,
The five areas I was going to mention that's in this legislation
that's going to be transmitted this week is, one, that consumers could
choose, or opt out of information being used and shared within a
conglomerate before it's used for marketing and other purposes.
What that would mean is people could get a form once a year and be
able to look at it and say if they don't want the information to be
shared, they could check a box and send it back in. If they don't fill
it out and they don't send it in, the information can be shared.
But recognizing that there is some information that's so sensitive,
especially sensitive, the President has set a higher standard -- what is
called opt-in -- that somebody has to say, yes, you can share it for two
areas of especially sensitive information. That's for medical
information and that's for a sort of detailed, comprehensive set of your
personal spending habits.
In terms of medical information, I think the best example is if a
bank wants to make a mortgage loan or an auto loan and think about
lending you money, can they go to their insurance affiliate and find out
how your health is? Well, the President believes the answer to that
should be no, unless the consumer affirmatively says, no, you can go
look at my health information at the insurance affiliate -- that we
should not be as Americans worried about if our mortgage or auto loan is
going to be using information from the insurance affiliate.
Secondly, if you use a checking account or a credit card account or
a debit card, the payments that are made, the payments that are made for
all of us, as Americans, should be processed and should be done, but
that we should have an opportunity not to have a whole list of our
personal spending habits shared. That they could not call up a "John
Doe" set of personal spending habits and see every payment I've made.
In essence, who we are as individuals determined by where we spend
our money, how we spend our money, how we earn our money and get that
whole portrait of us as individuals. Again, we could say, yes, that can
be shared. Again, the opportunities to mark it would be there. If
there was a complete list of all those who travel to Europe, it would be
all right to put me on a list of all those who travel to Europe; but not
to say, give me everything on "John Doe."
Q So that's an opt-in on the complete detail list, but an
opt-out on, like, if they want to know everybody who buys cat food or
SENIOR ADMINISTRATION OFFICIAL: That's right. That's right. So
that what we're looking at is how do consumers benefit, and recognizing
there is some benefit to maybe having a complete list of people who
travel frequently to Europe -- that's an opt-out, a lower threshold.
But in terms of saying everything about you or I as an individual,
tell me all the spending that we've done, that's facilitated by a
payment system, by a check or credit chard -- that's an opt-in. And
this is meant to be around those payment systems, specifically. And,
again, the medical is the opt-in.
Q On the payment issue, will they be able to use that
information to develop sort of generalized profiles of people and their
spending habits? In other words, a lot do that now, where they don't
necessarily release every single payment, but they might mark it, well,
this person generally likes to buy this brand or these types of things
with their credit cards. Would they be able to still use the data, or
would it just be completely off limits?
SENIOR ADMINISTRATION OFFICIAL: Curt, if you enjoy a particular
product -- tennis -- they might be able to say, give me everyone that
likes tennis, and Curt might appear on that and they could give a
general, broad mailing on tennis. But they couldn't, without an
affirmative "yes" or opt-in, say, give me everything you've got on Curt.
A private investigator, in essence, couldn't call up a bank and
say, give me everything you've got on Kirk, unless you affirmatively say
that that --
SENIOR ADMINISTRATION OFFICIAL: Let me clarify. Covered in the
opt-out is not only the, give me everything you got, the 9,000 payments
he made; you couldn't say, tell me about Curt's spending habits. And
they could not say, Curt loves tennis, traveled to Europe, cigars, et
cetera. They could say, tell me the people who like cigars, and give
them a list of the cigars.
The notion is sort of it revolves around you, it's individualized
to you, that gets to the higher opt-in.
Q The issue, whatever they might want to find out about, they
could find people who might be interested in those things, but they
couldn't just say, like you said, go to you and, give me everything
that's on this person?
SENIOR ADMINISTRATION OFFICIAL: Again, we're looking at, and the
President is very focused on the consumer and how the consumer can
benefit -- recognizing that there are various benefits of this
Information Age. Marketing is one of those benefits, to have broad,
generalized marketing. One could still opt-out if one wishes not to
have those benefits.
But in terms of the overall sense of who you are as an individual,
where you spend your money, individualized in a query way, like a
private investigator might say, give me everything on Curt -- that that
would be an opt-in.
Q -- more mundane example. Like supermarket chains often use
these shopping club cards, where you scan the card and you get various
coupons. And one of the reasons they do that is so they can
electronically monitor all the things that you purchase on a regular
basis at your local supermarket.
From that, larger corporations find out, oh, you're buying size one
baby diapers -- all right, let's start sending you some coupons on
Infamil or something like that. I mean, there's a very strong
integration between what supermarket chains monitor of your shopping
habits, and transferring that on to larger corporations that sell
products that they stock.
How does that fit or not fit in this whole scenario?
SENIOR ADMINISTRATION OFFICIAL: This fits around financial
privacy. And this initiative recognizes that there is a certain
sensitivity to our financial records, as there are to medical and
children on line that the President has spoken to.
And so this is really talking about the payment function. And your
example of a shopping card, where somebody says, I want to be a member
-- in essence, they have become a member and they've made a decision to
be part of the many of those benefits that come with that membership.
But when we think about promoting the economy, one of the things
that the President thinks about is promoting the confidence in the
payment system and bringing all Americans into the banking system. And
that that payment system -- just the checking, credit card, debit card
function is what this refers to.
Q Will people be penalized for opting-out or not opting-in? If
they apply for a bank loan, for example, and they say they don't want
the banks insurance affiliate to give them the medical records. Can the
bank then deny the loan on that basis?
SENIOR ADMINISTRATION OFFICIAL: Well, the legislative language
would actually require that they would have to ask all applicants for
the same information, regardless of whether there is an affiliated
insurance company. So --
SENIOR ADMINISTRATION OFFICIAL: Regarding medical information.
SENIOR ADMINISTRATION OFFICIAL: Regarding medical, to your
question. If the bank truly asked everybody for this information -- not
just those that happen to have an insurance company -- that would be an
additional threshold. So there are very few products today that they do
that. But if that were the case, and it was really important to that
Q So this is kind of protecting from the bank taking advantage
of its insurance affiliate in cases where it otherwise wouldn't have
Q The reasons that they moved toward these conglomerations is to
synthesize this information flow and give them a better sense of risk in
the marketplace, is it not?
SENIOR ADMINISTRATION OFFICIAL: There are many benefits that this
administration saw, the industry saw in financial modernization. That
the marketplace should best dictate how industry is organized --
consumers dictate how industry is organized. And those many benefits we
believe will be very much still seen -- marketing and cross-marketing
was one of those potential benefits, that's still very much that
consumers will get that. But at the same time, that we all recognize --
and as the President will lay out in his speech later today -- that we
have to adjust our rules for this new age, to protect the zone of
privacy and give consumers choice; that there may be some consumers who
will say, no, I want a zone of privacy that I might not wish to share.
Now, on the other hand, there are many, many parts of this
legislation that will allow processing to go on; that your checks could
be processed; that they could check for risk and fraud and work with law
enforcement agencies -- even in a complex world of finance; securitize
the financings; that we'll have to have the protections in the
legislation that would still go forward.
SENIOR ADMINISTRATION OFFICIAL: Just two clarifications, also. We
would argue that the benefits of affiliation and the protecting
consumers privacy are entirely consistent objectives. And, in fact, if
you don't protect consumers privacy, consumers will not fundamentally
have confidence in these large institutions and the benefits to our
system won't materialize.
And in order to demonstrate that, there are -- actually, we
proposed two new exceptions that would expressly allow, would clarify
that it is allowed for institutions to provide, for example, customer
service centers that have information about multiple products, or send
you single, aggregated account statements of all your different product
The test was always, is there a consumer benefit and is there a
consumer harm. Those sorts of things which the banks argue is why they
need to do this are clearly consumer benefits and we see no adverse
implication, as long as it's not re-used for other purposes.
SENIOR ADMINISTRATION OFFICIAL: At the risk that we're about to
land, why don't we see how many more questions.
Q I just wondered if you could cite some examples of risks
involved in not putting these projections in place. What have you seen
that sort of spurred this?
SENIOR ADMINISTRATION OFFICIAL: Well, I was going to say this. I
think that this is a quickly evolving landscape. And if one looks at
the various benefits that come from the consolidation from the
technology that you're referring to, they're very real. But there are
many who would wish to mine data and look at a consumer and see what
more they can get.
There are various circumstances last year -- and one was a case up
in Minnesota that the State Attorney General brought, there were cases
out in California about various financial institutions that sold data,
specific account number data -- that when brought into the public light
many people are very concerned about.
And I think that's what the President is trying to address, is to
instill that confidence, give choice and build the base for the whole
economy to continue to grow.
END 12:08 P.M. EDT