Military Family Tax Relief Act of 2003

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.

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 rise in favor of the Feinstein-Boxer amendment, and I note that there are a number of others on that amendment as well. I hope colleagues will realize this amendment will make this bill better, will make this bill stronger, and I am going to take a few minutes to explain why in as simple a way as I can.

I stand here very proud that my State treasures privacy and they acted on that value. After years of struggle, California put into law the most tough financial privacy standard in the Nation.

Others can say oh, that is not true, and they can quibble, but the facts are the facts. Every consumer group that you ask, any group that is objective on the subject, will tell you that our law is the best and is far better--certainly than the House bill, and better than the bill that is before us today.

I do want to compliment my friend. You have made some good advances here. I will talk about that in my statement. But we can do better, and I offer this amendment with Senator Feinstein in a very friendly way, in the hopes that maybe we can make this better.

The struggle to pass SB-1, California's financial privacy law, was very long and very transparent. I want to say that State Senator Jackie Speier did an unbelievable job. For 4 years, she worked with banks on behalf of the consumers. The industry invested more than $20 million in lobbying expenses and campaign contributions during those 4 years but eventually a wonderful thing happened. The banks came to the table and they negotiated with Senator Speier. The fact is, there was a reason. They saw the handwriting on the wall. They saw that there was going to be a State initiative. They had already gathered 550,000 signatures quickly and Senator Speier's provision for more strict privacy was supported in the polls. How about this? California Democrats in the polls supported this initiative by 96 percent; and California Republicans, 88 percent; Independents, 90 percent.

So Senator Speier had touched on a very important value of Californians. I really do believe if you took a poll today, just a really carefully worded one which went into every State in the Union, there would be support for this Feinstein-Boxer amendment to make this bill stronger.

I will explain it.

The committee went ahead and did some good things. It includes fraud alerts for consumers and protection for credit card numbers on receipts and free credit reports.

It is very important they say that you can't go outside and share the information with outside companies. That is great. I salute Senators Shelby and Sarbanes for that progress.

However, there is one major problem Senator Feinstein and I are addressing in this amendment. We are saying, first of all, if a State wants to go further than you have, we ought to have that chance. Your bill ought to be a ceiling. All good wisdom doesn't reside here. We always like to think it does, but it doesn't.

A lot of our States are ahead of us, and they want to do more. Yet California finds itself left out because there is no preemption for our State. We know we are not going to get that. We have 35 million people in our State. We can't get an exemption. We understand that. We are simply asking you follow the lead of our State on this one because I think it is the fair thing to do.

Some people listening today might say, Well, the committee bill says you can't go outside and share information. But you can share it with your own affiliates that are in your little corporate family. What is wrong with that? That is a logical question until you look at the banking industry and look at how big these families can get.

Let us take a look at some of these families for which this bill would allow affiliate sharing.

Let us take a look at Citigroup. They are small? They have 1,630 affiliates.

Bank of America. How well I remember the proud history of that bank in my State. They have 1,323 affiliates.

JP Morgan, 967 affiliates; Wachovia Corporation, 886 affiliates; Wells Fargo, 671; Bank One, 253.

When you say to all of these people you cannot share information outside your family, you are in essence saying you can share it within your families. We are talking about thousands of affiliates that will get every bit of information about you and your financial transactions. My colleagues can stand up here from night until morning and argue with me on the point that we are wrong on this. I know we are right. This is the right thing to do to protect our constituents.

Let me show you Bank of America affiliates. I want to show it in a way that is pretty graphic. I will not read every one of their affiliates. I am going to truncate and do this quickly.

We have nine charts listing all of these. These are Bank of America banks: Commonwealth National Bank, First National Bank, National Bank of Howard County, and American State Bank. I can't even pronounce some of these. Bank of America Mexico; Finacero Bank of America. They will know your transactions. That is just the first Bank of America chart. Let us look at one other. We do have nine of these. I will go quickly.

Here is another one. Let us go to Bank of America insurance companies and look at who they own: First National Insurance Services, American Fidelity and Liberty, Bank of America Insurance Services, Inc., and Home Focus Services. I don't know what they do, but they will know what you do. General Fidelity Life. How about Boatman's Insurance Agency? You do business with any one of these and more than a thousand affiliates will know how much you earn, what your Social Security number is, how did you pay, if you missed a payment, what your likes and dislikes are.

Let us show a couple of others.

Bank of America and other affiliated companies: Oakland Trace Redevelopment, Holly Springs Meadows, LLC, East Nashville Housing. You go into a bank in California and East Nashville will know what you are worth.

Dallas-Ft. Worth Affordable Housing, Old Heritage New Homes, Texas Corporate Tax Credit Fund, and it goes on. Michigan, Osbourne Landing Limited, it goes on and on. West Wood Manor Development, Elk Ridge Apartments.

The point I am making--and I will show one last chart. We have 9 of these charts listing Bank of America's 1,600 affiliates, for anyone who really cares enough to examine each and every one of these affiliates.

Our point is we could go on and on and make our point with each and every chart, but I am going to spare my colleagues. They have worked long and hard already today. Here is the point: Do not share. That is a simple message. This Senate supported ``do not call.'' We said people deserve their privacy. If you don't want to get a call at night, you shouldn't have to get a call at night.

We are saying if you decide--and our amendment simply says you have to opt out automatically under this Feinstein-Boxer amendment--your information would be shared, you have to take an affirmative step and opt out. If you are a person who believes in your right to privacy, and you don't want some company over in The Netherlands to know what you are about, because there is one here--Bank of America Netherlands. How about Odessa Park? These are worldwide affiliates. We are very proud of Bank of America. Good for them. They have all of these affiliates. But not good for them if they start to share information.

Under the underlying bill, they can share all sorts of information with every one of these affiliates. Guess what. You get turned down for a loan, let us say, because of information that was shared among the affiliates. You have absolutely no right to know who told who what, where, and when. What if it was wrong? There is no redress. There is no way to correct the record.

All I can say is I have heard the debate, and I have heard our amendment taken out of context: Oh, gee, that amendment will make it worse for people. Wrong. I will tell you who is supporting our amendment--people who have fought their whole lives for consumers and for the rights of people to have privacy. That is who is supporting us.

The AARP, which represents many seniors, supports our amendment; the ACLU fights for civil liberties and privacy; Consumer Federation of America, Consumers Union, the National Association of Consumer Advocates, National Community Reinvestment Coalition, Privacy Rights Clearinghouse, Privacy Times, U.S. PIRG. These are people who absolutely know our amendment is a step in the right direction.

I have a couple of other points to make. I will make them as quickly as I can.

I want to share with you some of the quotes that were made by the big banks when California passed its law. Did they complain about it? Not at all. This is what they said.

This is Diane Colborn who lobbies for Personal Insurance Federation. She called this workable, reasonable compromise a ``balanced measure that will provide meaningful protections to consumers while also addressing the workability concerns that our members and customers had.''

Jim Bruner, who lobbies for the Securities Industry Association, appeared before our committees in California. He said the measure is a ``good, workable, reasonable bill.''

The ink didn't dry on that bill before they came up here and started wining and dining and talking to people--I guess you can't wine and dine anymore, and that is a good thing--about why this bill couldn't go too far. Don't go too far; it is a burden. I am so sorry about that. I was so excited when California passed the privacy protections.

In closing my remarks, I will read some newspaper editorials.

From the New York Times: ``Buyer Beware,'' just written a few days ago.

This (affiliate sharing) is a dark and unmapped universe in

which banks, credit card companies and insurers have free

rein to share detailed records among thousands of affiliates,

with customers largely powerless and unknowing. Bank

balances, buying habits, investment profiles and more can be

tapped into in ways that invite fraud, marketing assaults,

identity theft and unfair credit decisions.

The Senate measure contains no real solution for

indiscriminate data sharing. Far preferable is an amendment

to be offered by Senators Dianne Feinstein and Barbara Boxer

of California that would require advance notice from

businesses so consumers would have a chance to block planned

sharings that reached beyond relevant credit issues.

Rejection of this amendment would only compound businesses'

temptation to be marketers rather than the protectors of the

privacy of the American consumer.

We know in the underlying bill you cannot share for marketing purposes, but there is a giant loophole dealing with preexisting relationships, making it confusing and complicated. That is why I believe the Feinstein-Boxer amendment will cure these problems.

From the San Jose Mercury News:

The financial services industry is guilty of a nasty bait-

and-switch on the people of California. Its lobbyists worked

with privacy advocates to help shape the law into what the

industry called a reasonable and workable compromise. All the

industry said it hoped for was a uniform privacy standard

across the nation.

Yet immediately after the California law was approved,

industry lobbyists went to Washington to try to erase it from

the boxes. The only national standard they are interested in

is one that gives them the unfettered right to sell their

customers' personal financial details to the highest bidder.

That was the San Jose Mercury News, in the heart of Silicon

Valley. This is a newspaper that very often is on the cutting

edge of the way we ought to be thinking about financial

issues.

I close with an editorial from The Los Angeles Times, October 29, entitled ``Put Privacy on the List.''

Congress promised voters that it would improve consumer

rights with regular reviews of the Fair Credit Reporting Act,

initially passed 33 years ago to balance the competing

interests of business and consumers. Bills in the House and

Senate would make it easier for consumers to see credit

reports and report identity theft. But the legislation

wouldn't help consumers keep private their bank balances,

spending patterns and other sensitive data. Congress could

cover this gaping problem by adopting the amendment crafted

by Feinstein and Boxer, which keeps alive the protections at

the heart of SB 1.

Colleagues, I know sometimes we get bills where deals have been cut, deals have been made, and everyone has put their hand out like after a sports game, saying: OK, on blood oath, we will not take amendments. I have been here long enough to know that.

I hope some colleagues will be open to this. We have done the right thing. Strong percentages of the American people--if it mirrors California, it would be 80 percent and above--support making sure that your personal-private financial data cannot be shared within a family of a company which could include thousands--1,600, 2,000, who knows--as more and more mergers go on. We do not want that information to be shared.

That is exactly the right course to take. I am hopeful we will get a strong vote on the Feinstein-Boxer amendment.

I yield the floor.

I send an amendment to the desk and ask for its immediate consideration. I am very pleased to say both Senator Sarbanes and Senator Shelby have signed off on this amendment.

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

I ask unanimous consent that Senator Feinstein be added as a cosponsor.

Very briefly, this amendment closes what I consider to be a little bit of a loophole in the marketing opt-out provision of the bill. We do two things. The underlying bill says the marketing opt-out expires after 5 years, unless a consumer opts out

again. We make the first opt-out permanent as long as the consumer wants it.

Secondly, the definition of a preexisting relationship with a company, with an affiliate, is drawn in such a way, it is very broad. So what we say is, a person will be deemed to have this preexisting relationship with the affiliate if they have purchased, rented, or leased a service or good from the affiliate during the 18-month period before the information sharing takes place or they have inquired about an affiliate's product in the 3 months before the sharing takes place.

By adopting this simple amendment, we keep financial institutions from violating consumer rights. I am very pleased that both sides of the committee have signed off on this, and I would be happy to take a voice vote on this at this time.

I have listened carefully to the comments of Senator Feinstein earlier, and I will make a couple of important points in response to her amendment.

First, as a privacy advocate, I fully appreciate the interest and concern at hand. Indeed, both Senator Sarbanes and I have been very sensitive and worked together a lot on privacy concerns. As we took up the Fair Credit Reporting Act, this was one of the key considerations we sought to balance, even as the law itself requires. We did this in what was a very comprehensive, transparent, and lengthy review of the law and issues at hand as we considered reauthorizing our national credit standard.

Second, the amendment of the Senator from California makes two basic assumptions which ultimately guide her amendment's approach and goal, as I understand it. No. 1, that there is something inherently nefarious about the use of affiliate structures; No. 2, that consumers have no rights or means to protect themselves with respect to the handling of their transaction and experience information.

I believe that our consideration in the Banking Committee would therefore be instructive in understanding the better approach adopted in our bill and why I intend to oppose the amendment of the Senator from California. To the first point: Why do affiliates exist? Companies establish affiliates for a variety of legal, tax, and accounting reasons--because laws require them to do it.

What do these structures mean for consumers? Some companies choose to create separate legal entities known as

separately capitalized affiliates. Other companies elect to locate all of their business lines in a single entity. Regardless of the structure that a firm employs, consumer information is generally used in the same fashion. Affiliates or the separate business line share it to service their customers, fight fraud, or develop new business. The affiliate sharing provisions contained in the Fair Credit Reporting Act exist to make it clear that companies should not suffer because they have chosen a particular corporate structure.

From the consumer's perspective, I believe there is no real difference between a company making an internal transfer of information among departments and sharing between affiliates. In fact, in many cases where affiliate sharing is occurring, most consumers would not recognize that the two parties are involved in the transfer. Rather, they would be under the impression that information is merely being moved within the single entity with whom they have chosen to do business.

Second, there are real rules and provisions governing the manner in which transaction and experience information is handled. First, we need to consider what exactly transaction and experience information is. Transaction and experience information involves checking and saving account balances, credit card balances and repayment history, mortgage balances and repayment history, and mortgage and brokerage account balances and transaction activity. In many instances, the information is the very information provided to the consumer reporting agencies where, as consumer report information, consumers are afforded significant rights under the Fair Credit Reporting Act.

More important, however, this is information that is routinely provided to consumers as required by separate laws and regulations. For example, the Truth in Lending Act, the Fair Credit Billing Act, the Truth in Savings Act, the Electronic Funds Transfer Act, provisions of the securities laws and the Uniform Commercial Code all provide consumers substantive rights with respect to transaction and experience information. These include disclosures and access rights and error resolution procedures.

I believe the bottom line is that consumers already have access to and rights concerning transaction experience information right now under the law. But at the end of the day, I believe the main concern I heard with affiliate sharing uses was the use for marketing purposes. At the end of the day, I believe that is all that is really left restricted, in some way, under California's approach after accounting for the exceptions and exemptions.

So after spending more than a year considering the law carefully in order to balance the needs of our national credit system, which we all believe is crucial to the operation and strength of our economy, with a need to protect consumers rights, the Banking Committee identified two key areas for increased Federal protection: The sharing of medical information and restricting affiliate sharing used for marketing purposes.

This bill does so in the context of the Fair Credit Reporting Act in a straightforward and narrowly tailored way and does not give preferential treatment to certain business models over others.

This brings us to a third and very important point. The Fair Credit Reporting Act deals with more than just financial institutions. The sponsors, as you know as a member of the Banking Committee, Mr. President, seek to impose a model that was tailored strictly for financial institutions to all furnishers of credit information, subject to the Fair Credit Reporting Act. This model is largely based on SB-1, the California Financial Services Law.

The amendment's sponsors have tried to graft a banking bill on to the Fair Credit Reporting Act. This effort, I believe, is misplaced, and this effort does not mesh with how the FCRA, the Fair Credit Reporting Act, works and to whom it applies. Gramm-Leach-Bliley made it permissible for California and all other States to pass legislation that regulates third party sharing activity. This bill would not affect those provisions in the California law that come because of Gramm- Leach-Bliley. With respect to the part of SB-1 that conflicts with the Fair Credit Reporting Act, the California law was preempted, making it unenforceable when it was enacted. This bill does not change or alter that fact in any way.

The irony is that, even if we were to assume these provisions were violated, California's attempt to overturn Federal law is actually weaker than the Senate bill. The California law, as I have heard here, as it is targeted at financial institutions, covers a much more limited range than the broader Fair Credit Reporting Act, which deals with information, not entities, and therefore includes retailers, auto dealers, mortgage providers--anyone who furnishes credit.

Furthermore, California's rule is eaten by its exceptions and its exemptions. Its provisions provide consumers with no real choices or meaningful protection. The Senate bill covers the areas that consumers care about--marketing and the sharing of medical information--by providing real protection. Unlike the Senate bill, the California law still exempts most of the largest financial service firms they claim the law is intended to address.

The Senate bill was carefully tailored to address key concerns in a more clear and a concise way. The Senate bill before us targets unwanted solicitations without otherwise preventing sharing activities that provide benefits to consumers. Unlike the California bill, the Senate bill is designed to protect consumer interests. The unenforceable portions of the California law were designed to promote a specific business model by hobbling others.

I yield the floor.

Mr. President, I now move to table the Feinstein-Boxer amendment and ask for the yeas and nays.

Mr. President, I move to reconsider the vote.

Mr. President, the managers are prepared to accept this amendment. I commend Senator Cantwell and also Senator Enzi for the work they have done in this regard.

I urge adoption of the amendment.

I urge the adoption of the amendment.

The managers are prepared to accept this amendment.

If the Senator will yield, we do have a copy of the letter from Sallie Mae.

I take a minute to commend Mr. Durbin, the Senator from Illinois, for his good work in this area. He has recognized this as a very important issue and has done something about it. Whether it is Sallie Mae or anybody else, what we are interested in is all the reporting we can get that would affect someone's credit. I again commend Senator Durbin for the work he has done. I am sure he will follow up and make sure this is part of the law.

If the Senator will yield, I understand the concerns. I think it is also true that debit card transactions and ATM transactions have some significant differences. Namely, the retailer owns the debit machine while the bank owns the ATM machine. This makes a ``point of sale'' disclosure--as we achieved in Gramm-Leach-Bliley--more difficult since banks cannot easily adjust the equipment and the software.

Absolutely. Senator Sarbanes and I agree with Senator Schumer and support further study of this issue. We have planned and drafted a letter to the Federal Reserve Board asking them to conduct a comprehensive review of this issue.

Madam President, the managers are prepared to accept the amendment offered by Senator Corzine. It is a good amendment and makes a lot of sense.

Madam President, I intend to oppose this amendment and all amendments that are not within the four corners of the Fair Credit Reporting Act legislation.

The committee spent a great deal of time, as the Presiding Officer knows, as a distinguished member of the Banking Committee, carefully considering the reauthorization and reform of the Fair Credit Reporting Act national standards.

The committee bill is carefully crafted, and it balances protecting consumer interests and ensuring the efficiency of our credit markets.

The committee bill was unanimously approved, as the Presiding Officer knows, by a voice vote in the committee, which is hard to get. It was unanimous.

Extraneous amendments, I believe, alter this balance and focus and threaten our ability to maintain the strong, bipartisan consensus necessary to pass this important legislation this year.

As a result, the managers of the bill--Senator Sarbanes and I--intend to oppose including this amendment and all non-Fair Credit Reporting Act-related amendments, regardless of their merit. This might have some merit, but I think it can be better served at another place on another day.

At the proper time, I will move to table the amendment. Right now, I yield to Senator Sarbanes.

Mr. FEINGOLD addressed the Chair.

Madam President, I move to table the amendment.

Madam President, I ask unanimous consent that the vote be deferred temporarily.

Madam President, I suggest the absence of a quorum.

If the Senator will yield, I believe that is a good amendment. I think it ought to be in other legislation. I am going to work with Senator Feingold. We all want to promote jobs in America. We believe the American worker can produce anything as well as, if not better than, any worker in the world. If we promote Buy America, I think we are saying something to our workers and our industry and our economy down the road, notwithstanding what others will argue.

So I commend the Senator from Wisconsin for bringing this up tonight. We are going to continue to work on this and try to put it in the proper legislation, where it is going to go somewhere.

Mr. President, I ask unanimous consent the order for the quorum call be rescinded.

Mr. President, on behalf of Senator Nelson of Florida, I send an amendment to the desk and ask for its immediate consideration.

Mr. President, Senator Sarbanes and I have reviewed the amendment. We have no objection to the amendment.

Mr. President, I suggest the absence of a quorum.

I object.

I believe the Senator from Wisconsin has an amendment pending.

Mr. President, I would like to respond to the Democratic leader.

First of all, we have gotten to where we are tonight on the Fair Credit Reporting Act coming out of the Banking Committee by working together in a bipartisan way. Senator Sarbanes and the Democrats on the committee have been involved in the formulation of this legislation as so many members of the Banking Committee have. That is why we are here today. That is why we believe we have put together a far-reaching, very complex piece of legislation. We are going to continue--assuming this bill passes and goes into conference--to work together because that is the only way we are going to pass this legislation. This legislation, the Fair Credit Reporting Act, would expire at the end of this year. We know we are working on a deadline. We are working on a good piece of legislation. We want to continue that.

I yield to the Senator from Maryland.

Mr. President, if it is proper at this time, I move to table the Feingold amendment, and I ask for the yeas and nays.

Mr. President, I would like to take a few moments to thank some of the staff who did outstanding work on the Banking Committee--Kathy Casey, chief of staff of the Banking Committee; Doug Nappi, our general counsel; Mark Oesterle, one of our counsel.

I also thank some of the Democratic staff who worked with us on this: Steve Harris, who is Democratic chief of staff; Marty Gruenberg; Lynsey Graham Rea, and Dean Shahinian. They have all worked together in a bipartisan fashion. I believe that is why this legislation was brought out of the committee unanimously and we will be able to pass it, because we had a lot of input from Members and committee staff on both sides of the aisle. It makes a difference.

I move to lay that motion on the table.

The motion to lay on the table was agreed to.

Mr. President, I ask unanimous consent that the vote occur on passage of the bill on Wednesday--tomorrow--with no intervening action or debate, at a time determined by the majority leader, after consultation with the Democratic leader. Further, I ask unanimous consent that following that vote, the Senate insist on its amendment, request a conference with the House, and the Chair be authorized to appoint conferees on the part of the Senate, with a ratio of 4 to 3. I also ask unanimous consent that S. 1753 then be returned to the calendar.