Consumer Federation of California

Banking and insurance interests gave more than $700,000 in campaign
contributions in the last election to members of a state legislative committee
that defeated a financial privacy protection bill, according to a review of
campaign finance records by The Chronicle.

More than a third of that money, about $254,000, went to two assemblymen
who are members of a moderate Democratic caucus with a history of opposing the
measure.

The nine Assembly Banking and Finance Committee members who abstained or
voted no in the June 17 hearing received a total of more than $667,000. The
three members who voted in favor of it received $37,450 in total.

On average, legislators who abstained from voting or opposed the measure
received $74,182 — nearly six times the $12,500 received from financial
interests by those who supported it.

The industry has steadfastly opposed increased financial privacy
protections, and the bill’s failure marked the fourth year in a row that some
version of it has stalled in state government.

"This bill is a clear illustration of how moneyed special interests can
thwart the public interest," said Jim Knox, executive director of California
Common Cause, an advocacy group that supports taxpayer-financed campaigns.

"This is a bill that polls show is overwhelmingly popular with the public,
that is identified as the top consumer protection bill in the Legislature, and
yet cannot get out of the Legislature because of the stranglehold of the
financial services industry."

Supporters of the measure, SB1 by state Sen. Jackie Speier, D-Hillsborough,
say consumers should have a right to decide if, and how, information about
them such as spending habits, bank balances and payment history is shared by
their financial service providers with other divisions of the company or
outside marketers.

The financial services industry says the bill would harm companies’ ability
to serve their own customers, increase their operating costs and pose
practical problems when it comes to implementing the bill.

BILL HAS LITTLE CHANCE

The measure now appears all but dead. In order to pass out of the Assembly
banking committee, the bill would have to receive four votes from five
moderate Democrats on the panel who have consistently opposed it.

Backers of the bill say they have given up hope that it will move forward,
and are now focusing their resources on championing a state ballot initiative
to put the issue before voters. Another hearing is scheduled for July 7.

Major donors to the campaigns were companies, employees, related political
action committees and industry trade groups including insurers Farmers
Insurance Group of Los Angeles and State Farm of Bloomington, Ill.; credit
card companies including Providian, Household International of Prospect
Heights, Ill. and Capital One of McLean, Va.; banks including Citigroup, Bank
of America, JPMorgan Chase and Wells Fargo; and credit scoring companies such
as TransUnion, Experian and First Data Corp.

"Farmers (Insurance) has a long history of full political participation in
the democratic process, and we support people who support a healthy business
climate in California," said Mary Flynn, a spokeswoman for the company.

THREE TOP RECIPIENTS

The three recipients who received the most money from the financial
industry were members of the group of moderate Democrats who either abstained
from voting or voted against it. They include Juan Vargas, D-San Diego, who
received $135,600; Ed Chavez, D-La Puente (Los Angeles County), who received
$118,800; and Ronald Calderon, D-Montebello (Los Angeles County), who received
$91,300.

Chavez and Vargas voted against a previous version of the bill on the
Assembly floor last year; Calderon is a freshman, but his brother, Tom, an
Assemblyman who has since been termed out, also voted against it. Chavez’s
contributions from the finance industry represented 22 percent of his total.

Chavez did not return two telephone calls seeking comment. When approached
on the Assembly floor Friday afternoon, both he and Calderon walked out of the
chambers. Vargas, when approached, said he would not discuss the issue with
The Chronicle, saying the newspaper "has stepped over the line on this issue."

The three banking committee members who received the least amount of money
from the industry were Assemblywoman Patricia Wiggins, D-Santa Rosa, the
chairwoman of the committee, who received $13,100; Ellen Corbett, D-San
Leandro, who received $9,500; and Cindy Montanez, D-San Fernando, who received
$1,700. Wiggins, Corbett and Wilma Chan, D-Alameda, who received $14,850, all
voted for the measure in the Assembly last year.

Of all the major corporate donors, only Household — which has since been
acquired by HSBC Holdings Plc of London — consistently gave to members who
voted in favor of the measure this year and last.

CHANGING PATTERNS

The pattern between campaign money and a politician’s view on an issue did
not always hold.

Montanez, for example, abstained from voting for the measure in the
Assembly hearing, but received the smallest amount of contributions from
financial interests out of all — $1,700, with $1,100 coming from two
different Wells Fargo entities.

Knox said his group’s study found that the financial services industry was
spreading campaign money throughout the Legislature, with only a slight
majority of 60 percent going to its supporters.

But The Chronicle’s findings show that 83 percent of the campaign money
given to Assembly banking and committee members went to officials who take the
industry’s side.

"It’s a pretty common dynamic to reward your supporters and keep them in
line," Knox said. "The data demonstrates that the lines have really been drawn.

They’re clearly upping the ante with the folks who are in their camp."

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CHART:

FOLLOW THE MONEY

The members of the Assembly Banking and Finance Committee, how much money they
received from the financial services industry and how they voted on SB1, a
financial privacy protection bill:

— AYES

Patricia Wiggins, D-Santa Rosa (chair) — $13,100.

Wilma Chan, D-Alameda — $14,850.

Ellen Corbett, D-San Leandro — $9,500.

– NOS

Russ Bogh, R-Cherry Valley (Riverside County) (vice chair) — $62,433.95.

Ronald Calderon, D-Montebello (Los Angeles County) — $91,298.78.

Guy Houston, R-Livermore — $77,300.

Tony Strickland, R-Moorpark (Ventura County) — $79,163.95.

— ABSTENTIONS

Ed Chavez, D-La Puente (Los Angeles County) — $118,800.

Lou Correa, D-Santa Ana — $66,154.58.

Tim Leslie, R-Tahoe City — $34,800.

Cindy Montanez, D-San Fernando — $1,700.

Juan Vargas, D-San Diego — $135,600..

In determining financial industry contributions, The Chronicle used all
donations from readily identifiable entities with financial business,
including banks, brokerages and mutual funds, insurance companies, credit card
companies, financial software companies, mortgage-related businesses such as
title companies and financial information companies such as credit-scorers, as
well as their trade groups, individual employees and political action
committees. The results do not include donations from nonfinancial opponents
of the bill, such as retail associations or media concerns such as AOL Time
Warner.