Coalition Urges President Obama to Defend California Financial Privacy Law
(CA) A coalition of privacy groups today urged the Obama Administration to defend California’s landmark financial privacy law against the banking industry’s legal efforts to overturn it. Click here to read the letter.
The US Supreme Court is currently considering taking up the banks’ appeal of a 2008 decision by the 9th Circuit Court upholding almost all provisions of the Financial Information Privacy Act of 2003 (SB 1 ‘ Speier). On March 9th, the Supreme Court invited the Obama Administration to voice its opinion on the California privacy law. The case is American Bankers Association v. Brown, Supreme Court Docket Number 08-730.
Letters to President Obama and Solicitor General Elena Kagan were signed by The Consumer Federation of California, Privacy Rights Clearinghouse, CALPIRG, Consumers Union, Consumer Action, The Older Women’s League, The California Alliance for Retired Americans, and Chris Larsen, CEO, Prosper Marketplace, and founder of Californians for Privacy Now, the original organization that spearheaded a 2003 ballot initiative campaign that turned fierce banking industry opposition into acquiescence with SB 1.
‘This represents a defining moment for privacy rights’ the letter states. "We ask you to stand with consumers by telling the Supreme Court to reject the banks’ appeal in Brown.’
Privacy advocates support the State of California’s position in this legal matter, which is that there is no merit to the appeal filed by the American Bankers Association. At issue is whether federal laws preempt portions of California law that regulate the sharing of private consumer information within a financial institution’s family of affiliates.
The 9th Circuit reversed a lower court and reinstated the right of California consumers to stop all sharing of personal information within a family of affiliated companies, as long as it is not related to credit worthiness. This ruling is significant because some large financial institutions have hundreds or even thousands of affiliates. In 2003, Citigroup furnished state lawmakers a list of 3,000 affiliated entities around the world, with which sharing of personal information was completely unregulated at that time.
This case provides the Obama Administration the opportunity to reveal its views both on personal privacy protection and on the necessary role of the states in protecting consumers from unfair practices in the banking industry in the absence of adequate federal regulation. The letter points out that California’s financial privacy law has proven a successful model for the nation, and that it fills a regulatory vacuum at the federal level.