Eliminate Privacy Notice Confusion Act

I yield myself such time as I may consume in support of H.R. 5817, the Eliminate Privacy Notice Confusion Act. I want to thank Representative Luetkemeyer for his work in introducing this bill. I've enjoyed working with him on it.

Madam Speaker, this is commonsense legislation that makes a minor change to our banking laws to revise a very costly and unnecessary requirement that financial institutions such as banks and credit unions and other depository institutions must send each of their customers a copy of their privacy policy every year, even when that policy hasn't changed from the prior year when they got the same exact privacy notification. For banks, credit unions, and other financial institutions of all sizes, this means spending a small fortune to reprint millions of complicated and long documents, then mailing them to every consumer, even when there's been no change in the policy.

It is disadvantageous not only because of the time and cost in mailing these--and the trees that are no doubt consumed--but also because customers have no way to separate the wheat from the shaft. They're getting these notices every year from every financial institution with whom they have dealings without any indication as to whether there's been a change from the privacy policy that they received just a year ago. By sending out less, we attract attention to those situations where there's been a change in the privacy policy.

Our bill makes a simple fix to this problem, requiring financial institutions to provide their customers with this additional notification only when there's been a change that affects the policy or practice as it relates to that consumer. As a result, consumers will know that the privacy notices that arrive in their mailbox actually require their attention. And banks, credit unions, other financial institutions that have been spending millions of dollars to mail out duplicative notices and redundant notifications each year can redirect those savings back to providing for the consumer, to their community, or to loans to help our economy grow.

Madam Speaker, I want to thank, as I did at the beginning of my presentation, our colleague and chief sponsor of this bill, Representative Luetkemeyer of Missouri, and thank him for his leadership on this issue. I also want to thank our long-time colleague, ranking member of our Financial Services Committee, Barney Frank, for his work in getting us to this point where we can consider this bill on the floor today.

I will, in short order, be asking for a recorded vote on this bill, not because it needs a recorded vote, but because I've been informed by my leadership that it's important to this House that we have time on the floor tomorrow to confer with each other on Members and that we have a sufficient number of recorded votes. So my colleagues should not interpret my request for a recorded vote as any statement that this bill is something we have to go on record on or that I would disagree with the outcome of any voice vote, but simply as an act of collegiality, showing that I think we ought to spend more time with each other on this floor tomorrow, and I know we will all enjoy that process.

With that, I reserve the balance of my time.

I'll take a minute to put into the Record the statements of Adam Levitin, a professor of law at the Georgetown University Law School, in support of this bill. He came before our committee in May of 2012 and stated ``there are unquestionably financial regulations that do little other than add to regulatory burdens.'' He cited, in particular, the provision that this bill addresses, and said: ``I would also urge the elimination of the privacy disclosure requirement even if there is no substantive replacement for it.'' But then he added: ``And, at the very least, eliminate the requirement of an annual

disclosure when there has been no change to the policy.'' I couldn't agree more with the professor.

I rise again in support of this bill, and I yield to no Member in terms of my dedication to privacy.

If this bill passes, you're going to get notification of what the privacy rules are when you start with the financial institution. You are going to get notified every time they make a change. And you are going to be notified any time of the night or day when you simply go onto the Web site and look at the required privacy notification.

When Gramm-Leach-Bliley was passed, not everybody had access to the Internet. I realize today not everybody does. But a much larger percentage of Americans are familiar with the Internet, have access to the Internet, and know that if they want to see the privacy notification, the privacy rules of their financial institution, it's there on the Internet in a way that most Americans are going to have easy access to.

The idea that you are mailed a copy of something you've already been mailed a copy of, which hasn't changed, that does little or nothing to provide additional privacy, except that we can say, Oh, we're for privacy.

If we want to protect the privacy of our constituents, we ought to do so in a meaningful way, not to simply say, The same thing you got a copy of a year ago today, which is available to you any time of the day or night, is something we're going to chop down some more trees and send you a copy of again. And that's the best idea we can come up with to protect your privacy.

I think, instead, we ought to pass this bill, know that we've given everybody a copy of the privacy policy of the financial institution on paper, that they get another paper notice if there's any change, and there is a continuous notice on the Internet every day of the year, every night of the year.

With that, I yield 1 minute to the gentleman from Massachusetts.

I thank the gentleman for his presentation.

I would be happy to cosponsor legislation to require an email notification once a year to every customer who's willing to provide their email address to the financial institution. There are some who would say, I don't want to give my email address to my financial institution. But to everybody who is willing to provide that email. I couldn't agree with you more. If this was done by email, it ought to be done at least annually.

I look forward to joining with the Members who are here in this room and are interested in requiring an annual email notification. I don't know if the sponsor of the bill would be interested in that. But I will join the gentleman from Massachusetts in legislation on that.

But let's act today to end the expensive and resource-consuming annual paper notification.

And with that, I reserve the balance of my time.

Madam Speaker, I yield myself such time as I may consume.

I would just state that I agree with the gentleman from Massachusetts, that we ought to require email notification of what the privacy policy is annually as a good compromise. I would hope that some of the others here on the floor would take a minute to comment on that, or I would yield to them. Obviously, such an email could be sent only to those customers who voluntarily provide their email address to the financial institution.

When you look at the idea of an expensive postal mailing using resources to provide an exact copy of something that was previously mailed in hard copy on paper to the same consumer a year earlier, on balance, that is not a good use of societal resources nor a good use of most consumers' time. I think the fact that these policies are up on the Web and available whenever somebody takes an interest in them is also important.

With that, I reserve the balance of my time.

I have no further speakers, and I yield myself such time as I may consume.

I would just add that there are many of us who are dedicated to privacy, but not every privacy requirement makes sense. Here's a case where people are notified on paper.

Finally, I want to address the gentleman from Massachusetts' comment that maybe when you were notified on paper your financial institution only had two or three subsidiaries and 10 years later they have several more subsidiaries with whom they may share information. The fact is that isn't disclosed in another copy of the financial institution's privacy policies. It may, in fact, be that your financial institution is offering more products, sharing your information with more subsidiaries. But voting down this bill is not a solution to that issue.

What is a solution is to have a policy where you have to send it in writing once, send it in writing when it changes, provide it on the Web. And I would join with others, I would hope, in introducing legislation requiring annual email distribution.

With that, I have no speakers, I have no further comments, and I yield back the balance of my time.

Will the gentlewoman yield?

This bill was passed by the House as part of a package on March 8, 2006; this bill was pretty much in this exact form and was passed by this House June 24, 2008, as part of a package; then finally, as a separate bill, H.R. 3506 was passed by this House on April 14, 2010. So the House has a strong record of passing this legislation, and I hope we continue to do so.

With that, I thank the gentlelady for yielding.

Madam Speaker, on that I demand the yeas and nays.

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 5817) to amend the Gramm-Leach-Bliley Act to provide an exception to the annual privacy notice requirement.

Madam Speaker, I ask unanimous consent that all Members have 5 legislative days in which to revise and extend their remarks and include extraneous material on this bill.

Madam Speaker, I yield myself such time as I may consume.

I would first like to thank Mr. Luetkemeyer and Mr. Sherman for authoring the bill before the House today. I would also like to thank Mr. Luetkemeyer for his hard work on the Financial Institution and Consumer Credit Subcommittee, where he has championed many initiatives to provide commonsense regulatory relief for small financial institutions.

The House of Representatives has already passed one bill to remove an outdated requirement for duplicative disclosure of ATM fees on the machines--commonsense reform. I urge our colleagues in the Senate to pass both of these bills to provide this commonsense regulatory relief for banks and credit unions across the country.

I know Mr. Luetkemeyer shares my concerns that in recent years Federal financial regulatory agencies have piled on more regulations without properly assessing the current regulatory regime to remove outdated, unnecessary, or overly burdensome regulations. Last year, members of our

House Financial Services Committee urged the Treasury Secretary to make good on a promise from the summer of 2010 to take care, as the Dodd- Frank Act was implemented, to ensure that Federal agencies conducted a thorough assessment of the current regulatory structure, to ensure this opportunity to truly modernize and streamline the Federal code. We wanted to make sure this opportunity was not missed. Although Secretary Geithner claims that this streamlining is a priority, we've really seen very little progress on this front.

H.R. 5817 provides an example of how both sides can come together-- and I would like to thank Mr. Sherman for his work on this as well--to identify outdated and duplicative regulatory requirements. Under current law, financial institutions are required to provide annual privacy notices to their customers that explain all of their information and practices. Financial institutions are required to mail those notices regardless of whether or not the information-sharing practices have changed. These annual mailings cost millions of dollars each year and do not provide consumers with new information if the financial institution has not changed their practice.

The legislation before us today will require a financial institution to provide annual privacy notices only if they have changed privacy policies that affect the customer. This is an important, commonsense bill that will provide further clarity to customers and consumers and eliminate an unnecessary regulatory burden for our financial institutions.

Again, I would like to thank Mr. Luetkemeyer and Mr. Sherman for their leadership on this issue, and I reserve the balance of my time.

Madam Speaker, I would like to yield such time as he wishes to consume to the principal sponsor of this bill, a great member of the Financial Services Committee, the gentleman from Missouri (Mr. Luetkemeyer).

Madam Speaker, I yield 2 minutes to my friend from Texas (Mr. Barton).

Madam Chair, I yield such time as he may consume to the gentleman from Missouri, the principal sponsor of the legislation.

Does the gentleman have any more speakers? I'm prepared to close if you're prepared.

Madam Speaker, I recognize myself just simply to close to say privacy is an issue that is of concern to all of us. In these new ways of communicating that we have--and we can only imagine in our future--I think it becomes more and more difficult.

I would respond to the gentleman from California when he says that email notices--I haven't discussed it with the bill's sponsor. I wouldn't have an objection to that. However, many of us live in areas where the penetration of email is not like it is in California or Massachusetts or probably areas of Texas. There is a long way to go before that could be. Maybe next time this is debated in 10 years or whatever, that would be the norm. So I would make sure that that option for those who want to receive the paper can still do this.

Frankly, I think we're overcomplicating this issue. I think it is a commonsense revision. If we took the gentleman's 10 people that he met on the street and said, What would you think if the bank didn't mail these privacy

notices to you every year, if he further questioned them and asked them how many read these point by point--and I put myself in this category-- it is probably very small, as well. Not to say that it doesn't need to be publicly available. When changes are made, we have to have public notification. I agree with that.

But I do believe, serving on the Financial Services Committee, I think it's become very apparent, when you talk to institutions and when you talk to customers that the piling on of new regulations, without weeding out some of these old regulations that have either been antiquated or duplicative or repetitive or wasteful or whatever, is burdening not just the institution, it is burdening the customer, too. I'm not sure it gets the wanted understanding of what's going on to the customer that we're trying to achieve here, and I do believe it's been overcomplicated.

I yield to the gentleman from California.

I thank the gentleman for bringing that up. I think it's an important point.

With that, I urge support of this bill, and I yield back the balance of my time.

Thank you, Chairwoman Capito, for yielding.

Also, I want to thank Mr. Sherman for his fine remarks. We certainly will take no offense to a recorded vote and will not oppose that. We understand and support collegiality among ourselves, especially in this time when it seems to be more partisan and toxic than it is friendly, so no problem there, Representative.

I rise today in strong support of H.R. 5817, the Eliminate Privacy Notice Confusion Act. I introduced this legislation earlier this year in an effort to reduce yet another unnecessary burden facing consumers and financial institutions alike.

Under current law, financial institutions of all sizes are required to provide annual privacy notices explaining information sharing practices to all customers. Banks and credit unions are required to give these notices each year even if their privacy policies have not changed in the slightest. This creates not only waste for financial institutions, but confusion among and increased indirect cost to consumers.

H.R. 5817 would require institutions to provide privacy policy information to their customers only if they've changed any policy or practice related to that customer's privacy. This bill would eliminate millions of costly, confusing, and often ignored mailings that cost millions of dollars to produce each year. And with passage of this bill, information included in these mailings would likely be more significant to the consumer because they would only come after a change in the privacy policy.

Again, I want to remind my colleagues that this legislation specifically ensures that a financial institution cannot be exempted from annual privacy notices if that institution changes in any way its policies or practices related to the disclosure of nonpublic personal information.

This legislation is supported by Independent Community Bankers of America, the Credit Union National Association, the American Bankers Association, and the National Association of Federal Credit Unions, among others.

Again, I want to thank the gentleman from California (Mr. Sherman) for his fine support and his good work on this issue. Also, I want to thank Chairman Bachus, Ranking Member Frank, Chairwoman Capito, and Ranking Member Maloney for their assistance in ensuring that this legislation passes without delay. This commonsense legislation has garnered widespread bipartisan support, and I urge my colleagues to join me in supporting its passage.

I thank Chairwoman Capito.

I would like to respond to some of the comments that have been made. First, I want to thank the gentleman from Massachusetts (Mr. Markey) and the gentleman from Texas (Mr. Barton) for their work on the privacy notice and protection of our private information. I think it is extremely important, and I applaud those efforts, and I support those efforts.

If you will look at this particular bill, this is not an effort to thwart any sort of ability for people to protect their private information. Within the privacy law, there are all sorts of other protections. So it doesn't change one single dot of an I or a cross of a T on the rest of the notifications there, whether it deals with the kind of information you can collaborate on or the different kinds of information that you can be a part of.

All it does is just say that the notification that is supposed to be required annually is not made unless there is a change.

The gentleman from Massachusetts made some comments with regards, Madam Speaker, to the amount of mail that he gets from the banks. That's not necessarily something that is the compliance area; it's called marketing. Whenever they're trying to market for their credit cards or market for their services, that's part of their marketing budget. That's where those dollars come from to be able to do those things. That's part of being a business.

When it comes time for an individual to be notified of changes, such as you merge another bank or another institution with others and you're one of the individuals whose institution was bought out, you will receive a new notice because obviously there will be a change in the information that's going to be held by the banks. You'll be notified of that because it is a significant change.

I'm not sure that the gentlemen that spoke in opposition have quite thought through their arguments. Basically, all we're doing is allowing for some bookkeeping things to be done here. We're not impacting the individual's privacy at all. I think if you went on the street and you asked 10 people whether they thought this was a good idea or not, I guarantee there would be at least nine, and probably one would say, I can take it either way. I don't see any opposition from the consumers themselves whenever they're actually paying for these notices through higher charges through their bank accounts.

I think that there is a lot of good we're trying to do here. We're not trying to change the world. All we're trying to do is continue to protect the integrity of the information the banks and credit unions are holding on these individuals and provide for the ability of those institutions to do it in a more effective and cost-effective manner.

I thank the gentleman very much.

The language which is in question here is language which was spurred by Mr. Barton and I in 1999 as part of the consideration of the Gramm- Leach-Bliley bill. The language for privacy, none had been included in the Senate and none had been included in the rest of the process. But as the bill came to the Energy and Commerce Committee in 1999, Mr. Barton and I, we added privacy language, believing that as companies are able to consolidate banking records, insurance records, brokerage records, the physical examinations of customers and their medical secrets, that there should be privacy here. We were no longer talking about just going into a bank and having old Mr. Wentworth there that you and your family had known your entire life, and you trusted Mr. Wentworth, and there was actually a whole long family history. That is no longer the case. We are now basically living in a world where we have moved from an era of privacy keepers to privacy peepers and data- mining reapers trying to create profiles of people, using all of their financial information as a way of basically making their companies more efficient, but simultaneously compromising the privacy of families all across our country. So, while ultimately the language which Mr. Barton and I included on the House side in Gramm-Leach-Bliley was watered down in the final compromise, that's the privacy that's in the bill.

So, one of the things, of course, that I believed and Mr. Barton believed was that people should get the information that their privacy could be compromised by these now huge mega-banks.

So what this bill is saying is, you don't have to notify people of that each year. You don't have to tell them. If they didn't figure that out when the bank first signed you up as a company, they never have to tell you again because they notified you once right there in the beginning.

Ladies and gentlemen, the amount of information which we get at home from these banks, massive, as you know. You open up your mailbox every day, and there's like 25 solicitations from financial institutions all across the country. They've got loads of money to do that, loads of money. You look at their TV commercials, loads of money. ``You're in safe hands when you give your family's wealth over to this financial institution.''

But if you ask them to just provide a scintilla of information on what privacy rights they have in terms of protecting all of their family secrets inside of that financial information, the banks say, Oh, no, that's too expensive. We can't do that. How can you afford that?

So this just gets right back to the same argument that we had during Gramm-Leach-Bliley, the same exact debate, the same exact terms. And all I can tell you is, there's a looming privacy catastrophe coming in this country. People just don't understand the full consequences of what this new cyberworld makes possible in terms of the compromise of information.

You know, when you're writing out the information to buy the Ritalin for your child, that's a check that the bank has. There it is. You haven't told anyone else in your family that you have a daughter who needs it. All of this has to be told to the public on an ongoing basis.

I urge a ``no'' vote on this suspension.

For the record, for anyone who's listening, the American Civil Liberties Union opposes this; the

American Library Association opposes this; the Consumer Union opposes this; the Liberty Coalition opposes this; and the Coalition for Patient Privacy opposes this.

And the reason is this: You signed up with a bank 10 years ago-- Megabank Inc. They sent you a privacy notice. Then every year for the next 10 years, they buy a new entity that locks right in as an affiliate. And you've already signed off on everything they do, but they don't have to notify you that this new entity, this new affiliate is going to have a totally new use for that information. But you are supposed to have already been notified in 2002.

Moreover, ladies and gentlemen, why can't they just email this notice each year to people? Why can't they just email it to people? ``Here's your privacy.'' And every year it goes out. No tree is chopped down. There is nothing done that affects the environment. Everybody just gets the email each year. ``Here are your privacy rights.'' And it goes in a separate email so that everyone is really getting the opportunity to single it out. It doesn't cost anything. It gives everyone all the information they need.

Thank you, Chairman Capito, for yielding.

I rise today in strong support of the amended version of H.R. 5817, the Eliminate Privacy Notice Confusion Act. Under current law, all financial institutions are required to provide annual privacy notices explaining information-sharing practices to customers. Banks and credit unions are required to give these notices each year even if their privacy notice has not changed. This creates not only waste for financial institutions but confusion among and increased costs to consumers.

In his book entitled ``The Financial Crisis and the Free Market Cure,'' John Allison reports that one bank offered at the end of its privacy notice to pay $100 to any customer that read its notice in full. Only one customer took the bank up on that offer.

Year after year, millions of dollars are spent on privacy notices that are either disregarded by or confuse the customers. Let's think about this cost for a second. This outdated requirement doesn't cost only in postage alone, but also costs in compliance costs, cost of supplies, printing fees, and man hours.

I talked to one community bank in my district that said they spent roughly 70 cents per disclosure. With a minimum of 250,000 accounts and customers, this one bank spends $175,000 a year on this requirement. It may not seem like a lot of money to some of my colleagues, but I can tell you that $175,000 is a lot of money for a small institution like this one in my district, especially when a lot of those costs are passed on to the customer.

There is some debate over what this legislation will do. Let me be completely clear: this legislation will only remove the Gramm-Leach- Bliley annual privacy notice requirement of an institution if an institution has not, in any way, changed its privacy notice or procedures.

This legislation does not exempt any institution from an initial privacy notice, nor does it allow a loophole for an institution to avoid issuing an updated notice.

We worked in a bipartisan fashion to amend this legislation to remove the stipulations for State-regulated financial institutions. The amended language is now identical to the legislation that passed the House by a voice

vote in the 111th Congress. Additionally, I would like to remind my colleagues that similar language, language that was the basis for the first version of legislation, passed in both the 109th Congress and the 110th Congress.

This language is not controversial, it does not jeopardize consumer privacy, and it does not exempt an institution from having to produce an initial or amended privacy notice. This legislation does eliminate millions of costly, confusing, and often ignored mailings. And, with the passage of this bill, the information included in these mailings would likely become more significant to the consumer because it would come only after a change in the privacy policy.

This legislation is supported by the Independent Community Bankers of America, the Credit Union National Association, the American Bankers Association, the National Association of Federal Credit Unions, and the Consumer Bankers Association, among others.

I'd like to thank the gentleman from California (Mr. Sherman) for his work on this bill. I would also like to thank Chairman Bachus, Ranking Member Frank, Chairman Capito, and Ranking Member Maloney for their work with us toward swift passage of this legislation.

With that, Mr. Speaker, I ask my colleagues for their support.