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CBA Publications >> Members' Only Publications >> Advocacy Alert

Advocacy Alert- 08/18/2003

CBA removes opposition to financial privacy legislation

About a month ago, CBA reported what appeared to be the final demise of the proposed privacy legislation, SB 1, authored by Senator Jackie Speier.  The financial services industry had done an outstanding job of “killing” the bill, pointing out the literally dozens of technical and operational problems the bill contained.  A lot can change in a month.

During the past week the industry has been talking with Chris Larsen and supporters of the initiative about a legislative solution to the privacy problem.  A draft was completed and on Tuesday of this week Senator Speier invited CBA to a meeting with other elements of the financial industry (insurance and securities) in San Francisco to see whether the agreement that had been hammered out would remove the opposition of the financial industry.

  • On Wednesday afternoon CBA’s board of directors met in an emergency meeting to review the elements of the compromise.  As a result of that review the board of directors voted to remove CBA’s opposition.  The proposed compromise contains the following elements which were critical to CBA removing its opposition:

    All transactional and operational uses of information are excluded from the bill.  Bill is effectively limited to the marketing use of information.

  • The bill protects the use of third party service providers by banks.  Specifically, Section 4056(b)(9) eliminates any restriction on the flow of information to an affiliate or a non-affiliated third party in order for the affiliate or non-affiliated third party to perform business or professional services, such as printing, mailing services, data processing or analysis, or customer surveys, on behalf of the financial institution.

  • The sharing of information with affiliates and joint marketing partners for marketing purposes is generally an opt-out.  The exception is financial institutions that that are in the same line of business (banking, insurance or  securities), which are wholly owned by the same parent and have the same functional regulator.  No opt-out is required for joint marketing agreements until January 1, 2005, for contracts entered into prior to January 1, 2004. 

  • The sharing of information with non-financial third parties for marketing purposes is generally an opt-in.  The major exception is the provision of retail credit and co-branded/affinity cards.

  • The annual notice is only required if a bank shares information covered by the bill.  While the notice is a separate document, it can be mailed with the GLBA notice.  The California notice is an opt-out form. The way the bill is drafted, the California notice could satisfy a financial institution's GLBA requirement to provide the consumer with an opt-out form.  Furthermore, in addition to the "safe harbor" statutory form, banks are able to go to their functional regulator for approval of an alternate form that meets the requirements of state law.  The alternative form approved by the functional regulator is "rebuttably presumed" to be in compliance with the law.

  • Enforcement of the bill is placed exclusively in the hands of functional regulators and the Attorney General.  This should have the effect of limiting or eliminating class action law suits.

  • The bill pre-empts local ordinances retroactively and prospectively.

  • Delayed effective date.  The bill does not take effect until July 1, 2004

  • While we believe that a uniform national standard is preferable to a patchwork of state or local laws, this compromise will accomplish two critical goals.  First, it will eliminate the initiative.  Second, it will pre-empt all the local ordinances that will interfere with the sharing of information by banks with unaffiliated third party service providers.

CBA announced the removal of its opposition at a press conference on August 14, along with representatives of the Personal Insurance Federation and the Securities Industry Association.  Also announced during the press conference were the following:

    • Chris Larsen will not file his ballot initiative signatures if, and only if, Senator Speier’s language clears both the Senate and Assembly.  If it dies in the Assembly, the initiative will still go forward.

    • Senator Speier indicated that if any banks decided to sue after her legislation was passed, she would hope that Californians would have “the good sense to take their money out of California’s banks and put it in credit unions.”

    • Assembly Member John Dutra indicated that he felt very confident about the Assembly’s willingness to pass the proposed language.

CBA participated in the press conference with a brief statement by James Clark, senior vice president and Director of Federal Government Relations, and also distributed a formal press statement (which is attached and also available on the CBA Web site www.calbankers.com).  If you have any questions about financial privacy or CBA’s media activities please call James Clark or Anissa Yates, vice president of Communications and Public Relations at 916/441-7377.

Regulatory comment letter

CBA delivered a comment letter to the Federal Communications Commission (FCC) urging it to soften its stance on the requirement to obtain a signed written consent before an "advertisement" may be faxed to any person.  Thus, if a person calls the bank to request that a rate sheet be faxed, the bank must first ask the person to mail or fax a written request and sign it before the bank can fax the rate sheet as requested.  The written request may be delivered electronically, but the signature must comply with applicable laws on electronic signatures.  There is no exception for existing customers.  The rule is certain to hamper marketing efforts and put a strain on customer service.  CBA's letter is attached.  Industry letters (including from CBA) opposing the Treasury proposal for banks to collect copies of ID cards are bearing fruit.  Reps Michael Oxley and Barney Frank, Chairman and Ranking Member, respectively, of the House Financial Services Committee sent a strongly worded letter to Treasury supporting banks' arguments almost point by point, no doubt a response to the many letters received by the committee from banks. 

Californians Against Shakedown Lawsuits Initiative

Californians Against Shakedown Lawsuits (CASL) is a group that has been organized by the Civil Justice Association and California and the California Chamber of Commerce and other interested business organizations to explore the feasibility of mounting an initiative campaign to reform existing law and put an end to the abusive class-action lawsuits filed by trial lawyers under the Unfair Competition Law (California Business and Professions Code section 17200).    Early polling by the CASL group indicates that a ballot initiative is a viable means by which to change the law.   Legislative reforms to the law have been pursued for nearly 10 years without success.  The trial lawyers continue to thwart any reforms sought through the legislature.   In order to obtain reform of the Unfair Competition Law at this time, the initiative process is necessary.  The financial services industry has been asked to join the effort to reform this law and contribute money to support the initiative.  A copy of the contribution form with contact information, and related background materials are enclosed in this Courier.

CBA/CBPA Joint Legislative Conference: California's Economy, Demographics and the Future

CBA and the California Business Properties Association (CBPA) are hosting a Joint Legislative Conference at the Silverado Resort & Spa in the Napa Valley on November 6 and 7, 2003.  This exclusive gathering brings together two leading business groups and provides an opportunity for you to meet and hear from many key Latino leaders in California, including Lt. Governor Cruz Bustamante and White House Intergovernmental Affairs Chief to President Bush, Reuben Barrales.  The focus of our conference will be: (1) the demographic shift in California to a Latino majority; (2) how the shift defines the marketplace; and, (3) what the economic and political impacts are as a result.  Don't miss this unique opportunity.  A copy of the agenda and registration materials are included with this Courier.  For additional information contact Yvette Ernst at 916/441-7377 ext. 214 or yernst@calbankers.com.

Fed PAC update

Congratulations to Tim Walbridge of 1st Centennial Bank for his employees’ participation in the CBA Federal PAC.  Their involvement has moved 1st Centennial from the 9th position to the 6th position, though Alliance Bank remains firmly in the lead.  CBA thanks the employees of the following members who have exceeded their CBA Federal PAC goal:

Alliance Bank                                       803%
F&M Bank                                          265%
The Mechanics Bank                            256%
Pacific State Bank                                188%
Bank of Stockton                                 173%
1st Centennial Bank                           166%
Mission Community Bank                     157%
Visalia Community Bank                       155%
Pacific Crest Bank                                152%
Encino State Bank                                146%
First Northern Bank                              141%
Affinity Bank                                        135%
Temecula Valley Bank                          133%
Mid-State Bank & Trust                       129%
Montecito Bank & Trust                       125%
Verdugo Banking Company                  118%
Union Bank of California                       107%
As of 8/13/03

CBA schedules district "meet and greets" with 2004 primary

CBA has begun to schedule “meet and greets” in the district with some of the more viable candidates that have met with our lobbying staff in Sacramento.  Listed below are the scheduled meetings to date.  If you would like more information on these meetings, or would like to participate in any of the meetings, please contact Mary Boruff at 916/441-7377, ext. 207 or mboruff@calbankers.com.  If you are not available, please send a senior officer from your bank.  These meetings are a good opportunity for you to get to know the candidates who may be voting on the issues of importance to your bank.

If you would like to recommend setting up a meeting with a candidate, please let us know.

DATE

TIME

CANDIDATE

OFFICE

LOCATION

Wednesday, August 20

2:00 p.m.

Ted Lempert (D-11)

Senate

San Mateo

Monday, September 22

12:00 noon

Hector Chacon (D-50)

Assembly

Los Angeles

Tuesday, September 23

12:00 noon

Cristi Cristich (R-70)

Assembly

Costa Mesa

Friday, September 26

12:00 noon

Tom Wilson (R-73)

Assembly

Orange County

8/14/03

Legislative meeting update

The following meetings have been scheduled between CBA members and their elected officials.  If you would like more information on these meetings, or would like to participate in any of the meetings, please contact Mary Boruff at 916/441-7377, ext. 207.  If you are not available, please send a senior officer from your bank.  These meetings are a good opportunity for your senior management to get to know the legislators who vote on the issues of importance to your bank.

You are welcome to phone in to a grassroots conference call (888/903-2663) every Thursday afternoon (4:00 pm – State Legislature / 4:30 pm – House of Representatives) prior to a scheduled district office meeting(s) to discuss CBA’s priority issues and to answer any questions you may have regarding meeting with your legislator.

DATE

TIME

LEGISLATOR

LOCATION

August 19

9:30 a.m.

Congressman George Radanvich
(CBA Facilitor: Bob Longatti, CBA)

Fresno

August 29

10:00 a.m.

Assembly Member Rick Keene*
(CBA Facilitator: Steve Johnson, Butte Community Bank, Chico)

Chico

 

 

 

 

 *          Freshman legislator

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