Clean Diamond Trade Act

Reserving the right to object.

Mr. President, the Senator from Florida has asked if I would yield for just a short time before I begin. Is that agreeable?

I thank the Chair.

Mr. President, is it possible for me to yield for 3 minutes to the Senator from Florida?

I thank the Senator from Florida and I thank the Chair for allowing this opportunity for the Senator to make a statement. I think he is referring to an amendment that I will introduce at a later time having to do with clearing up the health definition in the bill.

The health definition in the bill is archaic. The vast majority of states have adopted more fully inclusive definitions, and we would like to have that definition in the bill.

Prior to the break for lunch, I was beginning to explain why the bill before us has a weak privacy standard on affiliate sharing. Specifically, the underlying bill permits financial institutions to share a customer's transaction and experience information with affiliates with few, if any, restrictions. As I stated, transaction and experience information could include extremely sensitive information about individuals such as their bank account balance and data mined from their check or credit accounts or where they buy goods.

If consumers cannot preserve the privacy of their bank balances or the places they go to make purchases, they do not have meaningful privacy protections. That is the weak privacy standard that will become the national norm if this bill passes the way in which it is envisioned.

Supporters of the existing weak standard argue that America's credit environment has thrived since 1996. So they say, why mess with a system that is working? I challenge that assertion.

First, because transaction and experience information remains undefined. As I pointed out before lunch, we asked the CRS to look at current law. We asked them how they would define ``transaction and experience'' information. They said it has never been defined. So it is questionable whether any privacy regime at all exists for the bulk of affiliate-sharing practices.

Secondly, identity theft has emerged as a national epidemic in the last 7 years. Both the chairman and the ranking member of this committee have done their utmost and been very receptive to trying to enact legislation to prevent identity theft.

The Federal Trade Commission recently published a study that suggested 9.9 million Americans are victims of identity theft every year. The cost is $50 billion annually. Studies have shown that much identity theft occurs in the workplace. So increased affiliate sharing will likely facilitate this crime. Potentially, thousands of employees in affiliated businesses will have increased access to the currency of identity theft, and that is Social Security numbers and other sensitive identifying information, such as date and place of birth and mother's maiden name.

In her testimony before the Senate Banking Committee, Vermont Assistant Attorney General Julie Brill directly linked affiliate sharing to identity theft. Here is what she said:

Many identity fraud cases stem from the perpetrator's

purchase of consumers' personal information from commercial

data brokers. Financial institutions' information sharing

practices contribute to the risk of identity theft by greatly

expanding the opportunity for thieves to obtain access to

sensitive personal information.

So that is what we are doing here. Now, this is a prosecutor who should know. This is what she deals with. So why broaden the scope and opportunity for identity theft to take place?

Assistant Attorney General Brill also cited work by researchers at Michigan State University who studied 1,000 cases of identity theft and found that 50 percent of the victims traced the theft of information to an employee of a company compiling personal data on individuals.

Third, it is an open question whether affiliate sharing has offered any price or service advantage to customers. According to an article by Janet Gertz in the San Diego Law Journal, there is some evidence that businesses use affiliate sharing to extract concessions from consumers. Let me quote her:

By profiling consumers, financial institutions can predict

an individual's demand and price point sensitivity and thus

can alter the balance of power in their price and value

negotiations with that individual. Statistics indicate that

the power shift facilitated by predictive profiling has

proven highly profitable for the financial services industry.

However, there is little evidence that any of these profits

or cost savings are being passed on to consumers.

Just recently, for example, the Federal Reserve issued a report on financial service fees and services showing that fees at larger institutions are generally increasing and services are decreasing.

So we are letting exist this whole area where businesses buy other businesses just to share consumers' data? And the consumer has no control over their personal data. That is wrong.

My colleagues may hear during the debate on this amendment that the affiliate sharing problem is addressed because S. 1753 allows consumers to opt out of certain marketing solicitations by affiliates.

I want to go into this because this has been widely circulated by the financial institutions. Senator Boxer and I were just questioned about it at a press conference we held. In truth, these restrictions that they say are there are grossly inadequate, and they barely scratch the surface of the problem.

Let me describe some of the uses of affiliate sharing that the bill does permit. First, internal credit reports: The bill permits companies to use transaction and experience information to create internal credit reports.

Martin Wong, general counsel of Citigroup's Global Consumer Group, testified before the Senate Banking Committee in June that:

Citigroup is able to use the credit information and

transaction histories that we collect from affiliates to

create internal credit scores and models that help determine

a customer's eligibility for credit.

In other words, a bank can use transaction and experience from its affiliates to determine if it is going to charge a higher interest rate to certain credit card customers and give perks to others or to deny a credit applicant a credit card.

In contrast to a traditional credit card report, a consumer has no right of access to transaction and experience information used by a bank to deny him or her credit. Nor would a consumer have any right to correct any errors made in compilation of these internal credit reports. So one can have their credit changed even without their knowledge. It can be wrong, and the person would not know about it. It all happens in this secret world of affiliate sharing.

Similarly, a health insurer could deny a customer a health insurance or life insurance policy based on transaction and experience information. For example, a life insurer might reject an insurance applicant because of evidence in his card or check transaction record that he visits liquor stores frequently, buys products at stores selling mountain climbing equipment and therefore is at risk of injury, or has purchased a gun.

These are just indications. These are just areas. But you can see where this thing is going. Essentially, consumers can be denied products or services and they will have no ability to determine why the denial occurred.

The bill would permit prospective or current employers, without an individual's knowledge or consent, to mine information about the individual from other affiliates with whom the individual does business. This could be used for hiring decisions, disciplinary action, job evaluations, or other employment purposes. Again, all of this goes on simply because you bank with a given bank. You think all these things are protected and in fact they are data-mining checks, where you go, who you are paying. This information is going out to a whole host of other companies, sometimes thousands of companies.

Some affiliates are offshore and American consumer protection laws do not apply to those countries. As United States companies continue to acquire affiliates overseas, consumers may not even be able to depend on existing consumer protection laws to protect information that is shared with an affiliate.

Earlier this month, and many of us read about it, a woman in Pakistan, transcribing medical files for the University of California Medical Center in San Francisco, threatened to post patient medical records on the Internet unless she was paid more money. While we have strict laws governing medical files in the United States, these laws are virtually unenforceable overseas.

The Senate bill does not prevent affiliated companies from accumulating and sharing uncomplimentary information about customers, such as if they have filed for bankruptcy, do not pay their credit on time, or complain a lot. This information can be used to push unprofitable customers into a different tier of customer services. Example, where there are longer waits for a customer representative, or eliminate the customer altogether. All of this happens because of the ease with which this information can be shared among commonly held companies.

Let me give an example. Business Week magazine has reported that Sanwa Bank gives A's to its best customers, but those whose profiles show they will generate less revenues get C's from the bank. The bank tends to charge those earning C's more fees, and is more likely to put them on hold when they call in for service. This type of profiling certainly can occur in the context of affiliate sharing.

Even in the area of marketing, this bill is grossly inadequate. It purports to give consumers the right to opt out of the sharing of transaction and experience information for marketing, but there are loopholes. The institutions are going around the Hill today, pointing out they already do protect this.

Let me talk for a minute about the loopholes. The bill excludes companies from the opt-out if they have a preexisting business relationship with the consumer.

What is a preexisting business relationship? Your guess is as good as mine because the bill doesn't define it. Presumably, a bank could argue it has a preexisting relationship with a consumer if a consumer came into the bank 5 years ago to cash a check, or even just made an inquiry about an account. Additionally, if a consumer does exercise the opt-out for marketing, which is in the bill, the opt-out expires after 5 years. At that time, affiliates can then start marketing again to the customer.

I find it disturbing that the supporters of the bill want to permanently preempt States from enacting stronger affiliate-sharing laws for credit reporting purposes, but only think customers' preferences should be recognized for 5 years.

Last, but perhaps most fundamental, the Senate bill denies the consumer the ability to define the parameters of his or her relationship with a company, and this, I think, is really important. Under the current bill, when a consumer purchases a product from a megacorporation, the consumer automatically, without his or her choice or consent, makes his or her information available to hundreds of companies. Lawyers call this type of relationship, where one side has all the bargaining power, an adhesion contract. Some courts rule these types of contracts invalid because they do not reflect arm's-length negotiation and could result in unconscionable terms for the consumer.

Our amendment is a substitute to the affiliate-sharing language in S. 1753. Supporters of the underlying bill claim the Government needs a viable national standard to ensure the efficiency of our credit market. This amendment provides such a standard. It gives consumers all across the country--in Alabama, in Maryland, in Kentucky, in Colorado, in Washington--the opportunity to have some say, some choice in how their personal data is shared. With the privacy of Americans more at risk because of the latest technological developments and identity theft, with privacy invasions at its core becoming the fastest growing white- collar crime in the United States, we believe strong national standards are critical.

Our amendment reflects the terms of the California privacy law, which the California Bankers Association just a very short time ago called reasonable and workable, and are now lobbying against.

I read the letter of the author of the California bill, which I think irrefutably states the turnaround the financial institutions have done in this opt-out provision. Jim Bruner of the Securities Industry Association stated at the press conference announcing the agreement on California law on August 14, just a short time ago:

``While we would have preferred a national standard,'' [the

California law] ``encompasses all aspects of the workability

needed to ensure protection of consumers' privacy.''

And then they turned around and did a 180.

Jamie Clark of the California Bankers Association said at the same press conference that the banks:

``. . . have no objection to the measure passing'' and

would tell its supporters to vote for the bill.

Clark added:

``We prefer a national standard so that you have a uniform

operating environment.''

But they didn't tell anyone in California, which has just passed a new law which provides opt-out, that they could not live with the opt- out standard.

They did not come back here saying the law was sloppily drafted. They liked it then. When you do the law back here, all of a sudden it is sloppily drafted.

Diane Colborn of the Personal Insurance Federation called the California bill ``a balanced measure that will provide meaningful privacy protections to consumers while also addressing the workability concerns that our members and customers had.''

The California credit unions supported this legislation and still do. I thank them for their support.

This amendment offers businesses in California and around the country the chance to get a moderate, reasonable, uniform national standard on personal privacy.

Under the amendment, companies would be required to give consumers notice of their intent to share transactions and experience and other information with their affiliates. Consumers would then have the opportunity to opt out--to say, I don't want you to do it, or to do nothing at which point the information could be shared. The company would be notified and would give them, I hope, a choice of whether their most personal information is shared among affiliates.

This amendment would also allow closely related affiliates in the same line of business to share information with each other. Specifically, companies would not need to provide an opt-out choice if one, the affiliate is regulated by the same functional regulator--an example of that is institutions that regulate financial service institutions such as the Office of Thrift Supervision and the Office of the Comptroller of the Currency would be considered the same functional regulator; two, the affiliate engages in the same line of business. An example of that is the selling of securities, banking services, and insurance would all be considered independent lines of business; three, the affiliate shares a common brand identification; and four, the affiliate is a wholly owned subsidiary of the same company.

The amendment also has numerous other exceptions that were ironed out after 4 years of negotiation in California to meet the practical needs of business. The exceptions include the following: No. 1, information maintained in common databases. This is another false rumor that is being spread on this bill. This amendment allows employees of an affiliate to have access to information maintained in a common information system or database so long as the information is not accessed, disclosed, or used.

That is the key. It doesn't require new databases. It doesn't mess up their database. It just says you can't access it if the individual opts out.

This exception is necessary because we don't want to disadvantage companies that have streamlined operations by combining databases and other information technology resources. On the other hand, this amendment still permits consumers to have a choice over whether information in the database can be used for secondary purposes.

This amendment, as the Gramm-Leach-Bliley and California law, has an exception for transactional uses of information.

Information sharing ``necessary to affect, administer or enforce a transaction requested or authored by the consumer'' or ``with the consent or at the direction of the consumer'' is excluded from the opt- out.

Our amendment has exceptions for affiliate sharing of personal information that is necessary for companies to effectively manage their operations. For example, for security purposes, institutional risk control, and to respond to customer disputes or inquiries.

Proponents for unrestricted sharing of affiliate information argue that it is needed to solve identity theft. They correctly point out that companies can track unlawful purchases or suspicious activity by monitoring unusual account activity, change of address requests, and other suspicious behavior.

This amendment explicitly allows for affiliates to share information ``to protect against or prevent actual or potential fraud, identify theft,'' et cetera.

In addition, the amendment has exceptions relating to a business, a merger, a sale, a transfer; to comply with Federal, State, or local laws; for outsourcing functions with vendors such as data processing or billing; and, to identify or locate missing and abducted children, witnesses, criminals and fugitives, parties to lawsuits, parents delinquent in child support payments, organ and bone marrow donors, pension fund beneficiaries, and missing heirs, or to report known or suspected instance of elder or dependent adult financial abuses; and an exception is also carved out for the United States of America PATRIOT Act.

I deeply believe that without this opt-out the National Consumer Credit Reporting System Improvement Act would create a permanent and unworkable Federal standard that would set back the privacy of personal information and allow sensitive personal data to be moved through dozens, hundreds, and, in some cases, thousands of other companies.

This amendment is quite simple. It is about consumer choice.

I am puzzled at the ferocity with which the financial institutions and the banks are lobbying against this amendment. They serve people. That is what they are there to do--serve people. Shouldn't someone know if this information is being marketed within the loophole? Shouldn't someone have the opportunity to say, I don't want you to use my information? In fact, I think I am going to change banks, if they do this. Find a bank that won't do it. That would be my advice to everybody.

I think consumers should be given the opportunity to tell a bank they don't want their information shared with other companies. This is America. We should have that freedom. We should have that right. If you vote for this amendment, Americans will.

Do I have a few more minutes? If I could quickly set aside this amendment and send one other amendment to the desk, I will not speak to it.

I am happy to wait. I will yield the floor at this time and do it later.

Thank you very much.

No. That is all right.

Mr. President, I send an amendment to the desk on behalf myself, Senator Boxer, and Senator Kennedy.

Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. President, this amendment essentially updates the definition of ``medical information.'' It takes a medical definition submitted by the National Association of Insurance Commissioners. It is the definition that is used by a majority of our States. I ask unanimous consent that a letter in support of this definition from the American Medical Association, the American Cancer Society, the California Medical Association, the Community Clinic Consortium, the San Francisco AIDS Foundation, and the AIDS Health Care Foundation be printed in the Record.

I believe both sides will accept the definition, and I would be happy to take a voice vote.

Mr. President, on behalf of Senator Boxer and myself, as well as Senators Harkin, Feingold, Durbin, Lautenberg, and Nelson, I send an amendment to the desk.

Mr. President, the bill before the Senate in its current form allows huge conglomerates, with just limited restrictions on marketing, to freely share vast quantities of personal customer information with commonly owned companies even if a consumer asks that the information not be shared.

Let me list the types of information we believe could be shared among companies that have common ownership--called affiliates--under the bill: Information mined from your check and credit card payments such as your political or charitable contributions, your magazine subscriptions, your liquor purchases, the location and identity of stores you frequent; the stocks you own and stock trading patterns; the cash you have in the bank; when your certificates of deposit mature; how much you owe on a credit card and what rate you get; your insurance claims history such as whether you pay your premiums on time, how many claims you have made and whether claims were paid out; how many times a consumer called the company's call center or complained about the company's service; an employee's work history, including performance ratings, use of sick days, vacation, and salary.

To make matters worse, the bill permanently preempts States from taking stronger action.

What we have before the Senate today is a weak privacy standard built for businesses at the expense of consumers which legislatures in all 50 States are forever barred from improving.

I am particularly concerned that financial institutions in California, with the lone exception of the California Credit Union, negotiated and signed off on State legislation resolving this issue, and now the same financial institutions are trying to eliminate the California law with national legislation.

I will spend just a moment on that because it is important. Essentially, the banks and financial institutions in California worked with the State legislature in crafting the Californlia law that has an opt-out for affiliate sharing. The reason they did so was because waiting in the wings was a well-funded initiative to pass an even stronger privacy law. They knew the people of California would pass that privacy law.

Senator Jackie Speier, who was the author of the California privacy bill, has sent Senator Boxer and I a letter. I will read two paragraphs from the letter.

``It has recently come to my attention that the financial services industry has been criticizing the contents of your amendment to S. 1753, substituting the newly-enacted and stronger California privacy standard on affiliate sharing in the `corporate family of companies,' as unworkable and unreasonable. This same industry recently called my California bill `workable and reasonable,' specifically removing their opposition to my measure and lavishing praise upon it, even helping to gather votes. Industry made it clear that my bill met their workability concerns, progress made with their active participation. If my bill was workable for industry in California, then why shouldn't it be the national standard?''

``One industry representative stood with me on that day and said my bill `encompasses all aspects of the workability needed to ensure protection of consumers' privacy,' while another called it `a balanced measure that will provide meaningful privacy protections to consumers while also addressing the workability concerns.' . . . Now the story is different, as industry sees a political opportunity to preempt California's standard on affiliate sharing with a weaker one.''

I ask unanimous consent the entire letter be printed in the Record.

Mr. President, while I was in California, I met with the CEOs of the major banks. It became very clear to me at that time what they were going to do. They were going to come back here and they were going to get a national standard that clearly preempted the California opt-out.

Incidentally, we have modified the amendment I have sent to the desk. I know there was some criticisms of the amendment. We have tightened it up. I think it will stand the test of scrutiny. This amendment protects American consumers' basic privacy rights. It creates a national opt-out standard for affiliate sharing. This would give consumers the choice of whether their personal information can be shared among unrelated companies in a corporate family of companies.

Under the amendment, a company would have to notify a consumer that it intended to share the consumer's information with unrelated affiliates and give the consumer the opportunity to opt out of this sharing. If the consumer does nothing, the institution is perfectly free to share the information.

This amendment is fully sensitive to the real-life demands of business. Where there is a legitimate business need for the information, this amendment provides exceptions to the opt-out.

First and foremost, related affiliates--which are defined as affiliates in the same line of business with the same functional regulator and with the same brand name--are exempt from the opt-out.

Second, the amendment does not affect the ability of companies to have common databases with their affiliates so long as the information is not accessed, disclosed, or used by the affiliate. This is one of the arguments they have raised that this exception is a big loophole. Answer, untrue. While a common database can exist, the amendment explicitly states that an affiliate cannot access or use the information in a manner inconsistent with the consumer's opt-out.

Third, to use consumer information to complete transactions; fourth, to protect against or prevent actual or potential fraud or identity; next, to comply with Federal, State, or local laws and to do data processing, billing, or mailing. This amendment does not affect the ability of affiliated companies to do any of these six things. There are a number of other standard exceptions.

Before I go into detail describing the amendment. I will spend some time talking about the shortcomings of the ``National Consumer Credit Reporting System Improvement Act'' with respect to a person's natural privacy and why this amendment is needed.

At the outset, I recognize the author of the bill, Chairman Richard Shelby. He has met with me and I am grateful for that meeting. He has listened to my concerns. He has made longstanding efforts to balance the rights of individual privacy with legitimate business needs. I deeply respect the commitment of Senator Shelby to consumer privacy. It is well known. He deserves recognition for his work to strengthen the privacy provisions of the Driver's Privacy Presentation Act and for introducing legislation to require an opt-in for affiliate sharing in the 106th Congress.

In the 107th Congress, he joined me as a cosponsor of the Identity Theft Prevention Act. Many of these provisions he has incorporated in the bill on the floor today, and I thank him.

I also thank Senator Sarbanes. I think his record on privacy is equally impressive. He fought hard to create the opt-out standards for nonaffiliated third parties during enactment of the Gramm-Leach-Bliley financial services modernization law. I have the utmost respect for his work on privacy legislation. He is a champion of consumer privacy.

The American people should know this about both of these Senators. It is just that Senator Boxer and I have a very strong view on the need to give consumers this opt-out on affiliates.

I also recognize this bill has a number of provisions I strongly support. It entitles every consumer to a free credit report. That is great. It creates fraud alerts. Great. It creates a national standard for truncating credit card numbers on store receipts. That is great.

I was delighted, because when I introduced identity theft legislation earlier this Congress, the chairman and CEO of Visa, Carl Pascarella, came and held a press conference and indicated that Visa was not going to wait for the bill, they were going to go ahead and truncate all but the last four digits, in any event, on their credit cards. As of June, all the new merchant terminals using the VISA system--affecting tens of millions of Visa credit cardholders--do have that truncation. Shortly, Visa will have all other stations truncating as well.

This morning Senator Kyl and I held a hearing on hackers getting into data bases and how you prevent that from happening. Visa testified, and it is clear they have taken this very seriously with a very elaborate system to get at the problem and to use technology to solve it.

So all these provisions were included in legislation that I have offered over the last 4 years, and I am very grateful to both the chairman and ranking member, who are here on the floor, that they have been incorporated into this bill. So I say, thank you, Senator Shelby; thank you, Senator Sarbanes.

Now, I think, though, that some of these needed provisions just become window dressing, if you really can't protect a person's privacy. The affiliate sharing provisions of the legislation would set that back because the information age is going to move ahead rapidly. That is one of the problems: Technology finds a way of moving ahead so fast before we have a chance to see that there is an appropriate regulatory system in place.

So the debate today over this bill is really part of a great struggle over whether Americans--ordinary Americans--will have basic control over the most elemental parts of their identity, and whether we can stop the misuse and commercialization of their most personal information.

Most Americans, I believe, consider their personal information their private property. I do. I consider my health data my personal data, my financial data my personal data. When I do business with a bank, I do not expect to see my mortgages purchasable on the Internet for $15 or $20. I do not expect somebody to buy my Social Security number over the Internet, or anything of that kind. Nor do I expect the bank with which I do business to give my data to a thousand--and it can be a thousand-- of their affiliates so their affiliates can contact me about traveling with them, investing with them, that they have a better scheme than my checking account. I do not expect that, and guess what. I do not think the majority of Americans do, either.

To give you a sense of the groundswell of public support for privacy, I would like to mention a survey of California voters by Fingerhut Granados Opinion Research on February 7 of this year.

The statewide survey found that by a massive 91-to-7 percent margin, California voters would favor a ballot proposition--and let me quote what it would say--that ``would require a bank, a credit card company, insurance company, or other financial institution to notify a customer and receive a customer's permission before selling any financial information to any separate financial or non-financial company.''

Mr. President, 91 percent would support an initiative to do just that. So they are supporting not opt-out, which is a lower, lesser standard, but they are supporting opt-in when it comes to affiliate sharing. Similar polls across this great land have reflected a landslide of support by Americans for stronger privacy laws.

In my 10 years in this Senate, I have never seen anything like it. There is a groundswell out there, let there be no doubt.

Here in the Senate we have taken some strong action to protect privacy in recent months. In one day, the Senate drafted and passed a bill upholding the ``National Do Not Call'' list. Recently, we passed legislation limiting e-mail spam. In each of these cases, Congress accepted the near unanimous will of the public that there should be limits on when and how commercial entities can invade ordinary Americans' privacy--be it at their homes from telemarketing calls or on their computers from endless e-mail spam.

These concerns are equally present in the debate over affiliate sharing, except the dangers to privacy are so much more insidious. Americans are fully aware of telemarketing calls because their dinners and evenings at home are interrupted by them. Americans are fully aware of spam because their e-mail is clogged with them. In the case of affiliate sharing, most Americans are not aware that their personal information travels from their bank to hundreds or even thousands of other companies.

What is an affiliate and why should we be concerned about the sharing of information among affiliates?

Affiliates are companies related by common ownership. As one example, Travelers Insurance, Diners Club International, Citi Financial, and Salomon Smith Barney are all affiliated companies owned by Citigroup. So the types of businesses that financial institutions can be affiliated with run the gambit: insurance companies, so you can be bugged by insurance companies; securities brokerages; mortgage lenders; travel agencies; retailers; automobile dealers; collection agencies; financial advisers; tax preparation firms. I even think they buy them just for this reason.

In 1999, Congress passed the Gramm-Leach-Bliley Act, which repealed portions of the Glass-Steagall Act that prohibited banks from entering into affiliations with other lines of business. So it became fair game. These financial institutions have moved, in a major way, to affiliate themselves with a tremendous array of businesses. These include insurance and securities brokerages, as I said, mortgage lenders, ``pay day'' lenders, finance companies, and on and on and on.

It could include investment advisers who are not required to register with the Securities and Exchange Commission. These are not mom-and-pop companies. The top dozen U.S. banks and financial institutions alone control thousands of health and life insurance companies, home mortgage companies, car loan lenders, housing developments, securities brokers, and other businesses.

Take a look at this. Citibank alone has 1,736 affiliates which they own. They own a mortgage company, an insurance company, a student loan corporation, Travelers Life and Annuity, Diners Club International, and Salomon Smith Barney holdings. This becomes a veritable goldmine of information trading for them, and the information that is traded is your personal information that lets an insurance company, or a mortgage company, or an investment banking company know where to go to get business.

Morgan Stanley has 628 affiliates, including the Discover Card, Dean Witter Realty, Southeastern Energy Corporation, and a number of insurance companies.

Wells Fargo, headquartered in my city of San Francisco, has 777 affiliates, including, again, a mortgage company, Advance Mortgage, Dial Finance Company, Pacific Rim Health Care Solutions, Tower Specialists, Norwest Auto Finance, and Auto Risk Managers. Again, a veritable treasure trove, a goldmine for the sharing of private, personal information.

Bank of America has 815 affiliates, including T-Oak Apartments, Stanton Road Housing, NationsBanc Insurance Agency, and General and Fidelity Life Insurance. By mining data from their affiliates, these corporations can compile vast dossiers on consumers to use to their commercial advantage. An affiliated company can call you up with full knowledge of your financial history and offer you credit cards, securities, loan consolidation, whether you need it or not, and you have no way to prevent the company from using your most intimate personal information.

Consider the following case: Several years ago, Nationsbank paid fines of $7 million to the Securities and Exchange Commission and other agencies over its sharing of confidential customer financial statements and account balances with affiliated securities firms. Nationssecurities used the account information to identify those bank customers who had expiring certificates of deposit. Sales representatives then marketed to these customers highly leveraged investments, mischaracteriz- ing them as straightforward U.S. Government bond funds. Investors, 65 percent of whom were over 60 years old, lost millions of dollars from this practice.

While Nationsbank paid a fine for its false and misleading sales practices, its sharing of customer information was perfectly legal under existing law. We need stronger laws to protect us from the potential predations of affiliate sharing. Unfortunately, the Senate bill does not rise to this test.

The 1996 Fair Credit Reporting Act standard on affiliate sharing, which is, for the most part, preserved in S. 1753, is not a strong national standard. The 1996 act permits financial institutions to share ``transaction and experience'' information with affiliates without restrictions. This experimental standard has proven vague and unworkable. Even though the 1996 act has been in effect for 7 years, no one can definitively say what the terms ``transaction and experience'' information mean.

When I asked the CRS to explain the FCRA standard, here is what they said:

The [Fair Credit Reporting Act] does not offer a definition

of a phrase, nor does the act provide any guidance with

respect to what types of information may be included.

Furthermore, none of the Federal bank regulators, nor the

Federal Trade Commission, have promulgated regulations

regarding the definition of ``information solely as to

transactions or experiences'' or what information may be

included in such.

Finally, discussions with industry representatives did

articulate a consistently used definition of what constitutes

a ``transaction or experience'' information.

In essence, both the House bill and the Senate bill maintain an exemption for the sharing of personal information, which nobody has defined.

Seven years after passage of the 1996 FCRA amendments, neither Congress, nor the Federal Trade Commission, nor any other agency has defined the term. An empty standard is a nonenforceable standard. I think America's personal privacy deserves better protection.

Consider again the sensitive information which could be shared among unrelated corporate affiliates if we allow the current standard to stand. This

chart refers to the information I have just been over: an employee's work history, including performance ratings, sick and vacation days, safety, whether the consumer is a complainer or not, can go out to all affiliates, your certificates of deposit maturity dates, so somebody can contact you when that certificate matures; stocks you own, so others can approach you. Then there are the personal things, such as political contributions, charitable contributions, your magazine subscriptions.

Think about that. These companies develop a personal profile on who you are and what you like, and then tell other companies about you. Today, I heard testimony at a Senate Judiciary Committee hearing about someone who shopped at Victoria's Secret who had their personal information used in that way. That is what this allows.

The collection of this information is not hypothetical. In Great Britain, unlike the United States, companies are required by law to file a report with the Government on the type of information they collect about consumers.

Here is what Citibank reported to the British Government about the type of information it was collecting about British citizens for marketing purposes. I think it is likely they collect the same information about United States customers. This information includes: personal identifiers, financial identifiers, identifiers issued by public bodies, personal details, habits, current marriage or partnerships, details of other family, household members, other social contacts, accommodations or housing, travel movement details, lifestyle, academic record, membership of professional bodies, publications, current employment, career history.

Mr. President, I am not aware of a time limitation.

Mr. President, I ask unanimous consent that I might be permitted to continue when the Senate resumes.

I thank the Chair.

Thank you, Mr. President. I appreciate the indulgence of Chairman Shelby and Senator Sarbanes for this opportunity.

Yes.

Mr. President, America's burden in Iraq grew heavier over the last 7 days. In that period of time, 27 American servicemen were killed and 35 wounded. We were awakened to newspaper headlines on Monday morning of: ``U.S. Copter Hit, With 16 Dead.''

On Sunday, I received the sad news that the National Guard helicopter which was downed was attached to the 82nd Airborne Division and piloted by 1LT Brian Slavenas from Genoa, IL. It was shot down by a surface-to- air missile near Falluja in Iraq.

Press accounts report that the missile was likely a heat-seeking missile because it hit the engine, but, thankfully, it did not explode. The helicopter went out of control, and First Lieutenant Slavenas clearly did the best he could at crash-landing the crippled aircraft. Quite possibly he saved the lives of those who survived. Sadly, he did not.

This morning, I called the Slavenas family expressing my sympathy for the loss of their son. I have read the press accounts about his short but eventful and full life and the love which his family and so many others had for him.

This morning I heard interviews on National Public Radio of his friends talking about a great young man--this 30-year-old helicopter pilot. He had just graduated from college a few months ago. He enlisted in the Army right after high school and, having completed that stint, he enlisted in the National Guard and went to officer training school and he became a helicopter pilot. He earned a degree in engineering from the University of Illinois. Although Brian stood 6 feet 5 inches tall, he was a gentle giant. He was an accomplished pianist. His brother Marcus said, ``He was very generous, very patient with people. I just loved being with him. He was my favorite person in the whole world.''

I ask unanimous consent that these articles of tribute to Brian Slavenas be printed in the Record.

Mr. President, there is another very important issue that is associated with this story. I have learned within the last 24 hours that all of the Chinook helicopters in the 106th unit, of which Mr. Slavenas was a part, consist of seven helicopters from the Illinois National Guard and seven from the Iowa National Guard. All of these helicopters do not have the aircraft survivability equipment required to protect them from the very threat that brought down this helicopter on Sunday.

This is a recurring and troublesome issue. We have heard time and again about National Guard forces which are activated and then shortchanged when it comes to the best equipment. We expect the most updated equipment to be given to the units that are in the fight. We understand that Active Duty troops must receive what they need. But consider where we are in the war in Iraq. It is supposedly a complete and seamless integration of National Guard, Reserves, and Active Duty forces. We expect the National Guard, under these circumstances, to receive the necessary upgrades in the war theater.

These Chinook helicopters are supposed to be equipped with one or more protective systems, such as the ALQ-156 system, to detect surface- to-air missiles, along with an automatic flare dispenser as a countermeasure. They are also supposed to be equipped with seat armor to protect the pilot and crew.

What I have learned within the last 24 hours, from reliable military sources familiar with the situation on the ground in Iraq, is many of the Illinois and Iowa National Guard helicopters have flown for almost 6 months in the theater without the necessary aircraft survivability systems. Some of them have received systems, some partial systems, but only within the last week or two, many of the systems have been scavenged from departing Guard units from other States that are leaving Iraq. Many of the helicopters don't have seat armor. There are reports that the radios don't function properly. Reliable military sources have told me and my office about the level of protection for our helicopters in Iraq and what they tell me is unacceptable. They tell me of helicopters ill equipped to deal with the threat of shoulder-fired missiles; units scavenging equipment from helicopters leaving the theater to secure the protective gear they need. They report on helicopters flying without seat armor to protect the pilot and crew, and of helicopters flying without equipment designed to protect them from known infrared missile threats; Guard units scrambling to find the parts necessary to equip their craft with protective gear. Is this how we equip our men and women who are called to active duty?

Today I am asking Secretary Rumsfeld to see to it the helicopters in the theater are provided with the aircraft survivability equipment necessary to meet the expected threat. If that equipment is not available, I believe Secretary Rumsfeld should protect those

units until they are properly equipped or reassess when and where they will fly.

I ask unanimous consent that this letter I am sending to Secretary Rumsfeld be printed in the Record.

Mr. President, I am also calling on Secretary Rumsfeld to investigate and respond as quickly as possible on whether the helicopter that was shot down on Sunday had on board a fully operational ALQ-156 system with an automatic flare dispenser and whether it had seat armor. I also believe we need to know the status of the other helicopters in this unit in reference to protective equipment, and what steps are being taken to protect the crews and passengers in those that are not properly equipped. I understand the ALQ-156 system is intended to protect against the expected threat from surface-to-air missiles, but may not be effective against other missiles in the theater.

I am also asking the Secretary if that ALQ-156 is adequate for the expected threat in Iraq. If not, I would like to know when the helicopters will receive the upgraded equipment and his assessment of the risk to military personnel of flying without such upgraded equipment.

I find the reports I am receiving from military sources about the lack of protective equipment on these helicopters to be alarming and unacceptable. We know what a dangerous environment Iraq is. The threats from surface-to-air missiles were well known even before this tragic crash. The helicopter that was shot down was not on a mission directed against regime remnants or terrorists. It was transporting soldiers to the airport in Baghdad so they could leave for R&R.

We will not know for sure how it was shot down or how it was equipped until the investigation is completed. This tragedy highlights the fact that protective equipment cannot only be reserved for missions in the fight. Every mission is in the fight in Iraq today.

The Senate passed the Iraq supplemental appropriations conference report yesterday with more than $87 billion for equipment for our troops in Iraq. If the funds are not adequate to protect our troops and aircraft, the Congress must be advised immediately. If there is a shortage of equipment, we must act immediately to secure it.

The dangers of war are well documented. Every soldier, sailor, marine, and airman should know this Government has done everything in its power to protect them, keep them safe, and give them everything they need so they can complete their mission and come home safely.

We have given this administration every dollar for which they have asked. Now they must give our soldiers what they need to be safe and successful--the protective gear and body armor they need--as they work on the ground among dangerous situations. Armor is needed for the Humvees to protect them from rocket-propelled grenades, and they need state-of-the-art equipment to protect our helicopters from shoulder- fired missiles.

I call upon the Secretary to address these shortages immediately and to investigate fully whether the helicopter that was shot down and all of the helicopters in Iraq are adequately protected. We owe this to our men and women in uniform and to their families who pray for their safe return.

I yield the floor.

Mr. President, I rise to speak in support of the Feinstein-Boxer amendment to S. 1753 on the sharing of information among affiliates. This amendment would give consumers the choice to opt out of having their personal ``transaction and experience'' information shared among affiliates. The privacy provision in the California law represented by this amendment was the result of long negotiations among consumer groups and banks, and in the end the banks in California called this provision ``reasonable and workable.'' Reasonable and workable. I am a cosponsor of this amendment because, in a reasonable and workable way, it simply gives consumers some control over their personal information.

Let me emphasize just a few key points about this amendment. The amendment is still about an opt out, not a blanket restriction. It just gives consumers the option of keeping their personal information personal. Now the underlying bill also has an opt out, but that opt out is minimal: it is just for marketing, just for new customers, and would expire 5 years after the consumer requested it. The Feinstein-Boxer opt out, by comparison, is for the exchange of transaction and experience information; it is for uses other than marketing; it is for current and new customers; and it has no expiration. It, therefore, provides more protection for consumers who are concerned about protecting their privacy.

Another thing to remember about this amendment: the amendment does not alter preemption. With this provision States would still be deprived, permanently, of the opportunity of enacting their own legislation relating to affiliate sharing. If we are going to have a national law, we need a reasonable national standard.

Mr. President, a lot has been said about this amendment and how it would create all kinds of problems, so let me be clear about what this amendment would not do.

The amendment would not prevent the extension of affordable credit. Affiliates could still request credit reports and scores, as always.

The amendment would not prevent affiliates working under the same name in the same line of business from working together: it contains an exception for sharing among such close affiliates. It would not impede the investigation for fraud or identity theft. It would not impede transactions or the servicing of a product requested by the consumer. It would not impede institutional risk control. It would not impede the resolution of customer disputes or debt collection. It would not impede efforts to locate missing and abducted children.

Mr. President, I say again: If we are going to have a national law, we need a reasonable national standard. This amendment is just such a standard. I urge my colleagues to support it.

I send an amendment to the desk.

Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. President, I announced my intention to offer this amendment at an earlier date. Since the announcement of that intention, we have been negotiating with Sallie Mae, the Government-sponsored enterprise which is the largest provider of student loans in the country. The reason for this amendment was a new policy of Sallie Mae, as of a few months ago. In fact, about a year ago Sallie Mae decided to stop reporting repayment information to two of the three major credit bureaus in the United States. It turns out that the Higher Education Act, which governs Sallie Mae, required that defaults on student loans be reported to all three national credit bureaus but, by regulation, positive repayment information only went to one.

As a consequence, many responsible students who had paid off their student loans were not provided the credit information on their own backgrounds so that it was clear that they paid off their loans. So these students who had turned to a credit bureau for a mortgage or a loan on a car would have an outstanding student loan. It worked to their disadvantage. This decision by Sallie Mae worked a terrible disadvantage to students who had done the right thing.

I made it clear to the chairman, Mr. Shelby, as well as Senator Sarbanes, that I thought this was an injustice that needed to be corrected. Fortunately for me and for the students involved, Sallie Mae has sent a letter. I understand Chairman Shelby, if I am not mistaken, has received a copy of this letter from Sallie Mae; is that correct?

I ask unanimous consent this letter be printed in the Record.

The letter makes it clear that Sallie Mae is reversing its position; that from this point forward they will report repayment of student loans to all three major credit bureaus. This is what my amendment sought to achieve, so I am going to withdraw this amendment and thank both Senator Shelby and Senator Sarbanes for their cooperation and urge them to join me in offering an amendment to the Higher Education Act which codifies in law this new policy that the Sallie Mae agency has now decided to implement.

There is no reason responsible college students, having paid off their loans, should be penalized because Sallie Mae refuses to notify all three major credit bureaus in America. I am glad with this letter they have decided to change their policy. I hope at a later time to offer this amendment to the Higher Education Act and thank the members of the committee for their cooperation in this regard.

Mr. President, Section 312 of the bill before us is entitled ``Procedures to enhance the accuracy and completeness of information furnished to consumer reporting agencies.'' My Responsible Student Amendment addresses exactly that: the completeness of information furnished to consumer reporting agencies. My amendment is designed to ensure that young Americans who have positive credit histories established by responsibly repaying their student loans will be able to take a clean shot at the American dream when they try to buy their first home. It does so simply by requiring what until recently was standard practice for student loan providers; regular reporting on all loan repayments to each of the three major credit bureaus.

Until recently, responsible repayment of student loans was rewarded as would be expected, with a positive credit history. Responsible repayment was responsibly reported by student loan providers, in the typical fashion, to all three major credit bureaus. One of those providers, the biggest, is Sallie Mae. Sallie Mae was founded in 1972 as a government-sponsored enterprise, GSE. In 1997, the company initiated the privatization process. Sallie Mae, in other words, was born and raised on the taxpayers dime. One might hope that it would therefore feel some responsibility to keep taxpayers' interest in mind.

About a year ago, however, Sallie Mae, by far the largest provider of Federally guaranteed student loans, suddenly stopped reporting repayment information to two of the three major credit bureaus. It turns out that The

Higher Education Act, which established the Federal student loan program, requires that defaults on student loans be reported to all three national credit bureaus, while positive repayment information only has to go to one. Is this the way we want to reward responsible repayment of student loans? Don't we want a system that rewards responsible repayment, rather than one that shrugs and says that that information doesn't matter?

What is the result of Sallie Mae not reporting to two of the three major credit bureaus? Thousands of young people--whose main or only use of credit has been their student loans from Sallie Mae--suddenly have major gaps in their credit histories. Stories in the Washington Post and the American Banker have described the case of one typical 31 year old, named Eric Borgeson. Mr. Borgeson is an architect who lives in Edwards, CO. Mr. Borgeson, who graduated from college 10 years ago, had a perfect credit repayment record on his three Sallie Mae loans. Then, midway through the home-buying process, his credit score dropped by 40 points. Sallie Mae had pulled his perfect repayment records from his credit reports with two of the three major credit bureaus. As a result, he ended up with a lower credit score and a significantly higher interest rate on his mortgage, that he estimates will cost him nearly $200 more per month in interest payments.

Why has Sallie Mae stopped reporting to two of the three major credit bureaus? The answer is simple: pre-screened lists. Credit bureaus typically sell lists of their customers, pre-screened to meet certain criteria based on the information in their credit reports. Sallie Mae's competitors were using such lists to offer Sallie Mae's customers better deals. Rather than meet the competition, Sallie Mae simply decided to pull its customers' information from bureaus that wouldn't agree to stop selling pre-screened lists.

Sallie Mae claims that it is simply protecting its customers from unwanted solicitations. Sallie Mae knows, however, that there is a toll free phone number people can call to keep their name off of such pre- screened lists. If it really was concerned about protecting its customers from unwanted credit card solicitations, it could simply publicize that number: 888-567-8688.

The group of consumers in question here is a unique group of consumers. Just starting their careers, still paying off their loans: if there is any group of consumers that benefits from competition among loan providers and consolidators, this group is it. This is a group that often wants to hear from Sallie Mae's competitors. Those still repaying their student loans may get offers from consolidators who will combine all their loans and charge a lower overall interest rate. Those who have finished repaying their student loans are often establishing homes, careers, and families and therefore using credit cards more than average users. They, therefore, may benefit from being able to compare the credit card package they have with the offerings of competitors.

By trying to shield its customers from competing offers, Sallie Mae does them a disservice twice: it punches a big hole in their credit histories, resulting in higher rates on mortgages and other new loans, and it prevents them from learning of better deals for other financial services. Each of these alone could cost consumers thousands of dollars.

My amendment prevents that from happening. It amends the Higher Education Act by adding the word ``each,'' requiring reporting to each of the major ``consumer reporting agencies''--credit bureaus--and making clear that both positive and negative information should be accurately reported.

Responsible repayment of student loans should be rewarded by inclusion in accurate and complete credit histories. This amendment will ensure that result.

Amendment No. 2062 Withdrawn

I need no further time. I ask unanimous consent to withdraw my amendment.

Mr. President, I thank my colleagues. My colleague, Senator Herb Kohl, shares my feeling on this issue and introduced a similar amendment and joins with me in saluting this change and making it clear we are going to move forward.

Mr. President, we usually go back and forth, I tell my friend.

Yes.

Mr. President, I don't mind waiting a few minutes if the Senator from California wishes to proceed.

Mr. President, a creeping coup against the forces of democracy and market capitalism in Russia is threatening the foundation of the U.S.-Russia relationship and raising the specter of a new era of cold peace between Washington and Moscow. The new authoritarianism in Russia is more than a test of America's ability to defend universal values that have taken shallow root since the Soviet empire collapsed. It presents a fundamental challenge to American interests across Eurasia. The United States cannot enjoy a normal relationship, much less a partnership, with a country that increasingly appears to have more in common with its Soviet and czarist predecessors than with the modern state Vladimir Putin claims to aspire to build.

On October 25, masked Russian security agents from the FSB, the successor to the KGB, stormed Russian businessman Mikhail Khodorkovsky's private plane during a stop in Siberia. He now sits in prison awaiting trial, accused of tax evasion, fraud, forgery, and embezzlement. Russia's richest man, founder and chief executive of its most successful private company, a leader in incorporating Western principles of accounting and transparency into business practice, and a generous donor to charity, Khodorkovsky had committed what in the Kremlin's eyes is the worst crime of all: supporting the political opposition to President Putin. Such an alternative center of power could threaten the Kremlin's supreme political control.

Upon assuming power in 2000, President Putin announced a now-famous ultimatum to Russia's top business leaders, whose fortunes were made by acquiring control of Russian assets privatized at fire-sale prices in the 1990s. President Putin said to them: stay out of political life and keep your fortune, or risk it by engaging in political activity. Most of the oligarchs chose to remain quiet. Three did not. Business tycoons Boris Berezovsky and Vladimir Gusinsky were forced into exile as a result of their support for opposition political parties and free media. Mikhail Khodorkovsky actually attempted to exercise basic political freedoms guaranteed, in theory, for all Russians. He has been thrown into jail as a result.

Admittedly, Messrs. Gusinsky, Berezovsky, and Khodorkovsky may not provide to proponents of democracy and free markets in Russia the most laudable personal histories upon which to wage a resolute defense of our democratic principles. But failure to defend them would acknowledge exactly what the Kremlin cynically alleges: that they are being prosecuted because of the way they made their money. What has caused these three Russian tycoons to be singled out are their activities in support of opposition political parties and free media. In reality, a concerted campaign to clean up Russian politics and society would reach into every corner of the Kremlin and every boardroom in Russia, but that is not happening. For better or for worse, there is a consensus in Russian society that the past should remain in the past as Russia moves forward. If Russian business and government leaders are in fact going to be prosecuted for their conduct a decade ago, then perhaps the former KGB officer named Vladimir Putin who assisted Stasi leaders and Eric Honnecker in oppressing the German people should answer for his crimes.

Mikhail Khodorkovsky's arrest, like the politically motivated indictments of Berezovsky and Gusinsky, should be seen not as prosecution for financial dealings done a decade ago--which would implicate thousands of Russian businessmen and political figures--but as part of a larger contest between the forces of statist control and a liberal-oligarchic elite. Who wins will go a long way toward determining whether Russia reverts to the traditions of its czarist- imperial past or charts a new course as part of an integrating, liberal international order. The consequences of this struggle, for both the Russian people and the world, will be profound.

For the Russian people, President Putin's rule has been characterized by the dismantling of Russia's independent media, a fierce crackdown on the political opposition, and the prosecution of a bloody war against Chechnya's civilian population. The ascent of former KGB officers throughout Russia's ministries and in the Kremlin has enabled Putin to use the long arm of the state to crush internal dissent, silence opposing political voices, and subdue free media. During the first Chechen war, more Russians got their news from Vladimir Gusinsky's independent NTV than from state media. Today, there is almost no free media in Russia. Intimidation, coercion, assassination of journalists, and armed raids by the security services have put most independent media outlets out of business. Beatings and assassinations of journalists recall not the new Russia but the dark legacy of the Soviet past. Those independent media outlets that remain feel forced to practice the kind of self-censorship that characterized the Soviet Union. Today, most Russians who read newspapers or tune into television or radio hear only the voice of the Russian state--as they did under totalitarian rule.

In a land where financial support for opposition political parties comes largely from business, the arrest of Mikhail Khodorkovsky, like the indictments of Berezovsky and Gusinsky, sends a chillingly clear message to Russia's business community that their assets are safe only if they steer clear of politics. Putin himself made this same threat to the oligarchs in 2000; it is clear that his government is carrying it out, and that Khodorkovsky is the latest victim.

Political assassinations also demonstrate the risk of speaking out against state power. Earlier this year, State Duma deputy Sergei Yushenkov, who had been investigating potential connections between the 1999 Moscow apartment bombings and the start of the second Chechen war, was killed outside his Moscow apartment. State Duma deputy Yuri Shendoshokhtin, who had been looking into the role of the FSB in the Moscow bombings as well as a scandal surrounding the involvement of FSB officers in illegal trade, was also killed in mysterious circumstances. Both crimes remain unsolved. In today's Russia--as in Soviet Russia, as in czarist Russia--the state uses its power to suppress political dissent. The arrest of Mikhail Khodorkovsky fits in a long tradition of political arrest and persecution stretching across the vast dictatorial tundra of Russian history.

Under President Putin, Russian citizens in Chechnya have suffered crimes against humanity at the hands of Russian military forces. It was during Mr. Putin's tenure as Prime Minister in 1999 that he launched the Second Chechen War following the Moscow apartment bombings. There remain credible allegations that Russia's FSB had a hand in carrying out these attacks. Mr. Putin ascended to the presidency in 2000 by pointing a finger at the Chechens for committing these crimes, launching a new military campaign in Chechnya, and riding a frenzy of public anger into office. Since then, between 10 and 20,000 Chechen civilians have been killed and hundreds of thousands displaced by Russian security forces. At Putin's direction, the Kremlin recently stage-managed an ``election'' in Chechnya that put Moscow's hand-picked candidate in power. The principal voters were Russian conscripts forced to serve in Chechnya. Moscow has made no effort to address the political grievances of a population increasingly radicalized by the brutality of Russian rule. Yes, there are Chechen terrorists, but there are many Chechens who took up arms only after the atrocities committed by Russian forces serving first under Boris Yeltsin's and then Putin's orders.

In short, Mr. President, I am worried that what we are seeing in Mr. Putin's government is a continuation of 400 years of autocratic state control, and repression. Since the end of the Cold War, many Western observers have optimistically argued that the way Russia is governed has fundamentally changed. Sadly, this appears not to be true. Whether ruled by the czars, Stalin, Brezhnev, or Putin, the Russian state has remained supreme within Russian society. It seeks fundamentally to control society, not to answer to it. The people serve the government,

not the reverse. This is not the behavior of a modern European nation; it is a form of unenlightened despotism cloaked in the mantle of international respectability, which Russia derives principally from its relations with other great powers--particularly the United States.

The ascent of former KGB officers to positions of power throughout the structures of the Russian state underscores this trend. Apparently KGB veterans Igor Sechin and General Viktor Ivanov, both deputy chiefs of presidential administration in the Kremlin, masterminded the assault on Mr. Khodorkovsky. I would like to congratulate the KGB for arresting one of the most pro-Western business figures in Russia today--someone whose personal and corporate behavior, through charitable giving and adopting Western standards of business, have brought more credit to Russia in the last three years than anything the Russian government has done. Meanwhile, the FSB has been unable to solve the murder of leading independent journalists. It has failed to bring to justice any suspects in the murder of democratic politicians. It has not been able to identify a single case of corruption inside the Russian government. Not a single Russian has been held to account for committing crimes against humanity in the Soviet Gulag. The FSB can't do any of that--but it can arrest Mikhail Khodorkovsky. What brave men they must be to kick down the doors of a private airplane and arrest an unarmed man.

The FSB's dominance in the Russian Government has renewed the specter of the imperial temptation that has guided Russia's external relations for centuries. For too many of Russia's neighbors, it is like the old Beatles song: ``Back in the USSR.'' Under President Putin, Russia has refused to comply with the terms of the Treaty on Conventional Forces in Europe. Russian troops occupy parts of Georgia and Moldova. Russia has effectively annexed the Georgian province of Abkhazia, which it has occupied for a decade. Moscow has supported attempts to overthrow neighboring governments that appear too independent of Russia's embrace. Russian naval forces recently attempted to assert control in the channel connecting the Sea of Azov and the Black Sea from Ukraine. Russian secret services are credibly accused of meddling in elections in Azerbaijan and Georgia. Russian agents are working to bring Ukraine further into Moscow's orbit. Russian support sustains Europe's last dictatorship in Belarus. And Moscow has attempted to cynically manipulate Latvia's Russian minority and enforced its stranglehold on energy supplies into Latvia in order to squeeze the democratic, pro- American government in Riga.

Under President Putin, Russia has pursued a policy in its ``near abroad'' that would create an empire of influence and submission, if not outright control. On October 9, Russian Defense Minister Sergei Ivanov declared that Russia reserves the right to intervene militarily within the Commonwealth of Independent States in order to settle disputes that cannot be resolved through negotiation. At the same press conference, President Putin declared that the pipelines in Central Asia and the Caucasus carrying oil and natural gas to the West were built by the Soviet Union, and said it is Russia's prerogative to maintain them in order to protect its national interests, ``even those parts of the system that are beyond Russia's borders.'' In the runup to the war in Afghanistan, President Putin was given great credit for ``allowing'' the United States to use the military facilities and airspace of sovereign countries in Central Asia. But Russia has no more right to speak for these countries than we do. The Putin Doctrine, asserting a right to imperial intervention in Russia's ``near-abroad,'' coupled with the ascendancy of the FSB, recalls a discredited Russian imperial past whose victims number in the millions. Russia's assertion of political control over its neighbors speaks not to a modern vision of Russian reform and renewal, but appears to reflect a czarist impulse to dominate neighboring populations. It is the international dimension of rising state control at home.

The dramatic deterioration of democracy in Russia calls into question the fundamental premises of our Russia policy since 1991. American leaders must adapt U.S. policy to the realities of a Russian Government that may be trending towards neo-imperialism abroad and authoritarian control at home. It is time to face unpleasant facts about Russia. Russia is moving in the wrong direction--rapidly. While the United States undertakes a necessary and comprehensive review of our policy, I believe Russia's privileged access to critical Euro-Atlantic institutions should be suspended. This access was obtained with the understanding that President Putin was committed to free markets, the rule of law, pluralist democracy, journalistic freedom, and the lawful constraint of the intelligence and security services. These now appear to be false premises.

The Russian Government is not behaving in a manner that qualifies it to belong in the club of industrialized democracies. The United States is hosting the next G-8 Summit at King Island, Georgia, in June 2004. Russia has been invited to participate and has been working its way in, but President Putin's conduct at home and abroad has worked Russia out. Putin's Russia should have no place at the next G-8 Summit.

Congress should not consider the repeal of the Jackson-Vanik amendment for Russia. It would be incomprehensible to consider easing a law created in response to Soviet repression when the Russian Government is continuing a similar pattern of behavior. I will oppose any effort to repeal Jackson-Vanik as long as Russia is moving in the wrong direction.

To any American businesses contemplating investment in or trade with Russia, I would simply say that this is not a place where the rule of law and Western codes of conduct prevail. You invest at your peril. Many Members of Congress have heard from U.S. businessmen who have lost money in Russia due to the absence of the rule of law. The American business community should consider itself warned: the Kremlin's recent behavior is a clear signal that your investments are not safe. I call on my own Government, including the Export-Import Bank and the Overseas Private Investment Corporation, to cease all guarantees of investment in Russia due to the unacceptable risk of state interference and expropriation, as demonstrated by the Russian Government's actions. American taxpayer dollars should not be used to subsidize U.S. investment in Russia as long as the rule of the FSB prevails over the rule of law.

Clearly, in personal meetings, the President of Russia attempts to reassure the President of the United States that he is a fellow democrat. An accumulation of evidence forces me to draw the opposite conclusion. I hope I am wrong, but I am increasingly concerned that in Mr. Putin's soul is the continuity of 400 years of Russian oppression. Under President Putin's leadership, Russia looks to the West for prosperity, technology, and modernity, but seems to be striving in every way to keep the values of the West out of Russia. Far from having a vision for Russia in which democracy and freedom and the rule of law thrive, I fear President Putin may have a vision for Russia in which the capricious power of the police at home, and the menacing weight of subversion and intimidation abroad, guide the state. Administration policy must recognize the cold realities of Putin's Russia.

The responsibilities that follow from this are clear: it is time for a hardheaded and dispassionate reconsideration of American policy in response to the resurgence of authoritarian forces in Moscow. It is time to send a signal to President Putin's government that undemocratic behavior will exclude Russia from the company of Western democracies. The wholesale suppression of free media and political opposition cannot be ignored. American policy must reflect the sobering conclusion that a Russian Government which does not share our most basic values cannot be a friend or partner and risks defining itself, through its own behavior, as an adversary.

Mr. President, I thank the forbearance of my colleagues. I yield back the remainder of my time and yield the floor.

Mr. President, I am pleased to join this morning in bringing to the floor of the Senate, along with my able colleague from Alabama, the distinguished chairman of the Senate Banking, Housing, and Urban Affairs Committee, S. 1753, the National Consumer Credit Reporting System Improvement Act of 2003.

This legislation is important to millions of Americans as we work to ensure fair, accurate, and effective credit reporting practices, and this legislation is designed to accomplish that objective.

First, I acknowledge and actually commend the distinguished chairman for the comprehensive series of six hearings on this legislation that were held in the Banking Committee. Chairman Shelby structured extremely productive hearings. There was a systematic approach to examining all aspects of this issue, and we heard from a broad range of interests in the witnesses who came before the committee. I think it is fair to say we covered all the bases.

Not all the bases got what they wanted. It never quite works that way when you do legislation. But I think we had a very open, transparent process, with people having an opportunity to present their positions. They were very carefully and thoughtfully considered. In the end, the legislation was reported out of the committee, on a voice vote, unanimously on September 23. I think that vote reflects the response to the chairman's willingness to work with all members of the committee.

Now, it goes without saying, each of us, if we could write the bill by ourselves, would have somewhat different aspects to the bill. There are areas where I would have sought to do more with respect to some consumer issues. But I think we sought to craft a balanced package here. We understand the need for a national credit reporting system for Americans all across the country. It means an opportunity to carry out their economic transactions swiftly, efficiently, and effectively. At the same time, of course, you have to be very alert to ensuring there are protections so people cannot be abused or taken advantage of in the process.

One of the things this legislation does--and I am going to refer to it in some detail very shortly--is it really seeks to address this issue of identity theft which has provoked so much misery and grief for people who are hit by it. It is really the central focus of people's attention now when they consider problems they are having with consumer financial matters. This legislation has some very significant provisions in that regard, and we were able to move those forward with the strong support of the members of the committee.

The Fair Credit Reporting Act, which this legislation, of course, affects provides for the ways in which credit information is gathered, disseminated, and used.

During the hearings, we received a number of recommendations for improving the operation of the act.

Among other things, the suggestions addressed: combating fraud and identity theft, protecting consumers' financial privacy, clarifying the credit scoring process and the use of credit scores, enhancing regulatory and enforcement authority, improving the accuracy of credit reports, improving consumers' understanding of the credit reporting process, combating abusive marketing practices, and finding ways to improve the financial literacy and education of all consumers.

I believe we have taken important steps to address all of these issues. The Senate bill includes a number of provisions that will result in enhanced consumer protections by helping to ensure accuracy of credit report information and fair practices in the collection and use of credit information and in the granting of credit.

Among other things this legislation will: provide consumers with free credit reports annually from the national credit bureaus and provide consumers with an easy method to obtain their free credit reports. This has heretofore not been available. It will require a summary of consumers' rights to opt out of prescreened offers; provide for accuracy guidelines; lengthen the statute of limitations for all FCRA violations; enhance identity theft penalties; extend the situations in which adverse action notices are provided to consumers; prohibit the sale, transfer, or collection of identity theft debt, so that such bad debt will not be perpetuated in the credit system; provide consumers with the right to opt out of marketing that results from affiliate information sharing, with certain exceptions to that right. Finally, of course, it will help enhance the financial literacy of all Americans.

Let me discuss some of these items in a little more detail.

First, accuracy. I don't think it needs much elaboration for people to understand that accuracy of credit reporting information is integral to our reporting process. Erroneous information on credit reports can often take a significant investment of time and money to remove. They can be extremely costly to consumers by significantly raising borrowing costs. Insurers, mortgage banks, and other financial institutions rely significantly on credit scores to make credit decisions. Therefore, inaccuracies in the underlying credit reports can make it more difficult and more expensive for Americans seeking to make major purchases. Yet we heard testimony in those extensive hearings, to which I referred earlier, that credit report inaccuracies is one of the major problems that plague consumers. This legislation addresses that with substantial measures in that regard.

In order to enhance the accuracy of credit reports, the bill directs the Federal banking agencies, the National Credit Union Association, and the Federal Trade Commission to issue guidelines and promulgate regulations with respect to the accuracy and completeness of credit report information.

Second, free credit reports. The bill allows consumers to receive a free credit report annually from each of the three national credit reporting agencies. The bill also requires the FTC to take steps to make it easier for consumers to obtain their free report, including: setting out rules requiring that a centralized, streamlined method be established so consumers can easily obtain free reports, and actively publicizing and conspicuously posting on its Web site--the FTC Web site--the rights available to consumers under the FCRA, including the consumer's right to a free report.

The provision of free credit reports is a significant step in helping consumers

to ensure the accuracy of their credit report information, and helping them identify possible instances of identity theft.

As to prescreening, under the FCRA, credit reporting agencies may generate for creditors prescreened lists of individuals with certain credit characteristics to be targeted to receive a direct mailing. This prescreening process results in much of the unsolicited mail credit offers that consumers receive and about which they often complain.

The success of the FTC's Do Not Call Registry has highlighted the frustration of Americans with unsolicited telephone offers. Under the Senate bill, creditors making such unsolicited offers of credit to consumers by mail will be required to include a summary of the consumers' rights to opt out of prescreening in their offers to consumers. In addition, this Senate bill increases the effective period of the telephone opt-out of prescreening from 2 to 7 years.

With regard to adverse action notices, under the current law, the FCRA, a consumer receives an adverse action notice after denial or cancellation of insurance, a denial of credit, or a denial of employment, based on information in the consumer's credit report. This adverse action notice then triggers a consumer's right to a free credit report and other of CRA disclosures.

Those are the provisions that have heretofore been in the law. What has happened, of course, is that, as the industry has grown more sophisticated in the technology, we are having a move to risk-based pricing. So there are many circumstances in which a consumer may apply for credit, but rather than receiving an outright denial, which is what happened in earlier days, which then was an adverse action and gave the consumer certain rights, the consumer may receive credit at an elevated rate or cost because of information on the consumer's credit report. In these situations, because a consumer has received credit, albeit at more rigorous terms, the consumer is not considered to have experienced an adverse action. Therefore, no FCRA rights are triggered.

This legislation now before us incorporates a recommendation made to us by the Federal Trade Commission to update the provision of adverse action notices so consumers are aware that information in their credit report is negatively affecting the rates they are paying for credit. Therefore, because they become aware of it, it gives them an opportunity to examine that information and to correct it if, in fact, it should be inaccurate.

Finally, in addition, the Senate bill takes important steps to improve the financial literacy of consumers by establishing a financial literacy and education commission within the Federal Government, which will coordinate the promotion of Federal financial literacy efforts, and will develop a national strategy to promote financial literacy and education.

I commend Senators Enzi and Stabenow, along with Senators Corzine and Akaka, and many others, for their leadership in this important area of financial literacy. Senator Enzi and Senator Stabenow and Senator Corzine and Senator Akaka, for a long time--really, since I have known them--have been interested in this issue. We are pleased there is a title in the bill that carries forward important efforts in this regard.

Let me turn to identity theft. I indicated at the outset that this was an issue of increasing concern across the country. Before I do that, I will simply mention a step that we took in this legislation with respect to affiliate sharing. This legislation contains provisions relating to the ability of financial companies to market to their customers based on private financial information of the customer that has been shared among affiliates.

The bill would require affiliates who share customer information for solicitation or marketing purposes--and most of the concern we have heard in this area has been with the use of this information for solicitation or marketing purposes--to disclose such sharing to consumers and to provide them with an opportunity to opt out of the marketing resulting from such sharing of information.

There are exceptions in the legislation with respect to this provision for preexisting customers, for service providers, and for the institutions responding to a consumer request. So on the solicitation for marketing, we are trying to address much of the concern that has been expressed to us, but we have been trying to do it in a very careful way so that the basic purposes of the legislation can be carried forward.

I want to spend just a few moments on identity theft because it is such an important issue now. We heard some absolute horror stories before the committee from witnesses who had experienced identity theft and what it has done to their lives--virtually destroyed their lives. Obviously, we have to deal in every way that is reasonably possible with this issue. It has become an increasing problem in recent years.

The Federal Trade Commission reported that the number of identity theft complaints it received last year far exceeded complaints about any other type of consumer fraud. Americans have serious concerns about this issue. Businesses incur significant costs dealing with identity theft. Honest citizens who are victims of identity theft incur very high costs in money, in time, in anxiety, and in an effort to correct and restore their spoiled credit histories and good names. Someone steals their identity and then uses it, and their whole credit record is being destroyed. Then it is almost impossible for them to function in a normal economic way in our society.

This bill contains a number of important provisions that will address identity theft, and I commend not only the chairman but the members of the committee--all of the members of the committee--who were prepared to focus on this issue and give it a very high priority as we sought to move this legislation forward.

The bill will allow consumers to place fraud alerts on their consumer reports. It will allow military personnel to place alerts on their reports indicating their active duty status. So there is a special concern for our men and women in the military.

The bill provides for free credit reports after a fraud alert. Consumers will be able to get two free credit reports in the year after a fraud alert is placed in their file, as they seek to clean up the situation and to remedy it.

As to account blocking, the bill will allow identity theft victims to direct consumer reporting agencies to stop furnishing information regarding the accounts associated with identity theft.

``One call'' policy: The bill will require that the national credit reporting agencies that receive consumer calls about identity theft direct the complaint to the other national agencies so that identity theft victims need not contact each agency separately. They can make one contact, and then the information is disseminated on identity theft.

With regard to notification of fraudulent information, the bill will require debt collectors who learn that information in a consumer report is fraudulent, maybe the result of identity theft, to notify the creditor of the fraudulent information.

On truncation of account numbers, the bill will require that businesses truncate credit or debit card numbers on electronic receipts.

And on prohibition of the sale of identity theft, the bill protects consumers by prohibiting the sale, transfer, or collection of a debt where a consumer is an identity theft victim with respect to that debt. This will help to prevent identity theft debt from being perpetuated within the credit system.

I want particularly to note the leadership of Senator Cantwell with respect to identity theft. Her identity theft legislation actually passed on the floor of the Senate last year, and this bill incorporates many of the provisions that were in her legislation, including an extension of the statute of limitations and the blocking provisions. I know she has worked closely with Senator Enzi in that regard in trying to address this identity theft issue.

I also want to acknowledge the work that Senator Feinstein has also done on the identity theft question. We are most appreciative of her efforts in this regard as well.

This is just a summary of a number of the provisions of this legislation

which I think extends important protections to consumers. The bill provides a number of important improvements in the credit reporting system.

As I mentioned earlier, this legislation was voted out of the committee on a voice vote. There are certain provisions of the existing legislation that will expire on January 1, 2004. Therefore, it is important this legislation be enacted before the end of this session.

I close by again thanking the chairman for the very fair and balanced way in which the hearings were conducted and in which the markup took place. We sometimes put down or minimize the importance of process. It is not a very catchy word, ``process,'' but a good deal of what we try to do here and when you try to make this democratic process work involves process. It involves how you go about considering issues and how open and fair you are in doing it; how the majority treats the minority and how the minority responds to the treatment it receives from the majority. I believe a good process contributes to good legislation, that it is an important part of formulating legislation and arriving at the building of a consensus to address important problems.

I simply want to say to my colleagues that I think the process that was followed in this instance was as it should have been, and I think the fact we bring this legislation to the floor out of the committee with a unanimous vote is, in part, a consequence of that process. I again thank and commend the chairman in that regard.

I yield the floor.