Mr. Chairman, first let me just say I do rise in strong support of the Waters amendment to protect Californians', Californians' mind you, financial privacy laws and identity theft provisions. I applaud my colleague from California for her…
Mr. Chairman, first let me just say I do rise in strong support of the Waters amendment to protect Californians', Californians' mind you, financial privacy laws and identity theft provisions. I applaud my colleague from California for her leadership on this issue, for identifying a mistake that was made, and really for just trying to correct it in a very rational way. That is what this amendment does. It corrects a mistake that was made. This bill is a bipartisan bill. We all wanted to support it; but coming from California, the gentlewoman has figured out a way that we should support this, and it would be a win-win for all of us.
The FTC, Mr. Chairman, reported on September 3 that 27.3 million Americans have been victims of identity theft in the last 5 years, including 9.91 million people, or 4.6 percent of the population in the last year alone. Now, these are epidemic levels, and we must do everything we can do to prevent identity theft and to help the victims of this horrendous crime. That is why this amendment is so important. It would preserve very important California laws on identity theft. These are California laws.
Let us be clear. If we do not adopt the Waters amendment today, Californians will lose vital identity theft provisions currently provided in California law. Victims of identity theft will lose the right to a free monthly credit report. Victims of identity theft will lose the protection of California's law providing the right to correct a credit report with a police report. Victims of identity theft will lose the protections of California's law requiring credit bureaus to place a fraud alert within 5 business days of receipt of a request from the consumer. And the list continues. In total, seven existing California laws would be wiped out by this bill and another four will probably be
eliminated. It really simply defies logic to kill these existing California protections for the victims of identity theft when we are facing a growing identity theft crisis in our State.
Again, I thank the gentlewoman for her leadership. I thank her for offering this fix to this very important bill, and I hope that we all can support this correction of a major error that was made.
Mr. Chairman, I offer an amendment.
Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, first, let me thank the gentleman from Ohio (Mr. Oxley) and the ranking member, the gentleman from Massachusetts (Mr. Frank) for their diligent work to really make this a bipartisan bill. Of course, I cannot support it as long as it preempts California and that is what it does.
I offer this amendment today on behalf of all Californians and all Americans, really, who deserve and want to take back control of their private financial information. And I want to thank my California colleague, the gentleman from California (Mr. Sherman), the gentleman from California (Mr. Farr), the gentlewoman from California (Ms. Waters), the gentlewoman from Illinois (Ms. Schakowsky), the gentleman from Massachusetts (Mr. Markey), and all of those who have been working on this very, very important issue and this important amendment.
Mr. Chairman, our amendment would make a major step towards reclaiming consumers' financial privacy by doing the following: First, it protects California's recently enacted landmark Privacy Act; and, secondly, it allows every State to enact financial privacy laws giving consumers in those States similar protections to Californians, which, of course, is the strongest in the Nation, if they so choose, only if they so choose. For those of you who are not fortunate enough to hail from the great State of California and may not be familiar with California's new law, let me just provide a little bit of background.
What does the new privacy law do? It gives consumers the right to stop the sharing of information by financial institutions, unless they meet very stringent criteria. The law requires financial institutions to obtain a consumer's affirmative consent before sharing information with most third parties. It also provides standards for consumers to receive clear notice of their rights.
Now, how did this groundbreaking law come about? Well, it was the result of a long hard fight and it is a major effort by California State Senators, Jackie Speier and John Burton. And I really want to thank them for their tireless effort in working with the financial institutions in California to come up with this arrangement, this compromise, this law which really did result in resounding bipartisan support for the bill SB1, which passed the California Senate by a vote of 31 to 6 and passed the assembly by a vote of 76 to 1.
Yes, I also want to thank Governor Davis for really standing up for California consumers by signing this bill. But it is very important, I believe, to recognize the critical role California consumers played in the fight for new and strong financial protections because in the end it was this broad support and the very hard work of California consumers that pushed the bill forward.
In fact, I want to cite a January California opinion poll to demonstrate the overwhelming popularity for a strong financial protection. Now, the poll found that 91 percent of individuals supported a ballot initiative that will require a bank, credit card company, insurance company or other financial institutions to notify a consumer and to receive a customer's permission before selling any financial information to any separate financial or nonfinancial company. The support was strong regardless of party affiliation: 96 percent of Democrats, 88 percent of Republicans, 90 percent of Independents. Clearly, financial privacy is not a partisan issue.
Now these groundbreaking, popular, hard-won protections which were negotiated with our financial institutions in California are threatened because of this bill before us today. Let us be clear, this bill does preempt California law. And what does that mean? That means that important California protections will just basically be wiped out. In fact, it means that Californians will never see parts of the law that was signed by the governor. And it means that the will of an overwhelming majority of Californians will be overturned by what we are doing today.
We cannot allow that to happen. We have an obligation to stop that and this amendment would do exactly that. And just like we have an obligation to stand up for all of our consumers today, we are standing up for our California consumers. We have an obligation to stand up for consumers, as I said, all across the country so that they have the opportunity to protect and to control their intimate financial details.
Consumers in California are no different than consumers everywhere when it comes to their financial privacy. Strong protections are what they seek and what they deserve.
I want to take a moment to address some of the inflated and really irrational concerns that have been raised about our amendment. It will not bring commerce to a grinding halt. It will not mean an end to affordable mortgages, and it will not leave more minorities without access to credit. It will not put an end to ATM machines, and it will not ruin the credit system as we know it.
It will merely require banks and insurance companies and other financial institutions to ask California consumers before they share and sell their private information. It will merely allow consumers and other States to benefit from similar protections in the future if they determine that it makes sense for them.
Mr. Chairman, I reserve the balance of my time.
Mr. Chairman, I yield 5 minutes to the gentleman from southern California (Mr. Sherman), cosponsor of this amendment.
Mr. Chairman, I yield 2 minutes to the gentleman from Monterey, California (Mr. Farr), a real advocate for consumers, a great leader.
Mr. Chairman, I yield 2 minutes to the gentleman from Massachusetts (Mr. Markey), a real leader in this Congress in the fight for privacy rights.
Mr. Chairman, I yield 2 minutes to the gentlewoman from California (Ms. Waters), whose diligence on this bill has identified many errors we are trying to correct today.
Mr. Chairman, I yield myself the balance of my time.
When the Committee rises and we are in the full House, I intend to submit for the Record a letter signed by 55 Democrats and Republicans from California discussing the fact that this law, if passed, would preempt California law, SB1.
Finally, let me just say I want to support this bill, but why would any Representative from California support a bill that wipes out the protections for California consumers that they have worked so hard for, for so many years?
Mr. Chairman, I will include for the Record the list of financial institutions in California that negotiated with our consumers and remained neutral as this bill was signed into law by Governor Gray Davis. I think it is very important that we protect California law, and if other States want to support stronger measures, allow States to do that. As the gentlewoman from California (Ms. Waters) said, this is a States' rights issue. I think this amendment would allow States to enact consumer protections that they deem necessary for their consumers.
American Electronics Association
California Bankers Association
California Chamber of Commerce
California Financial Services Association
California Mortgage Bankers Association
Capital One
Citigroup
Countrywide Financial
Farmers Insurance
Fidelity Investments
Financial Services Privacy Coalition
Household International, Inc.
JP Morgan Chase
Mr. Chairman, I ask unanimous consent to withdraw this amendment.
Mr. Chairman, let me just thank the gentleman from Vermont for his leadership on the committee and for bringing this amendment today to the floor. But I must say that this is a very moderate amendment, it is a very conservative amendment, and I was, quite frankly, surprised he would go for it. But in the spirit of compromise, he did. So, very seldom do I believe that something is better than nothing, but I believe that this is such a fundamental injustice as it relates to our consumers that I had to support this very modest measure.
Quite frankly, a creditor should not be allowed to increase interest rates if consumers are paying the debt according to the agreed upon terms. They should not be allowed to raise interest rates based on payment histories of another debt. That is just fundamentally wrong. When individuals agree to a contract, when a consumer believes that they are doing the right thing and paying their monthly payments, how in the world can they get set up to fail? That is what this does.
An interest rate that jumps from 7 percent to 29 percent, bankruptcy, certainly, will follow if, in fact, this does not fit within the consumer's financial scheme. And generally, the consumer has a financial plan that they have to stick to in terms of payment schedules of debts. And so a huge payment like this is wrong. It would make more sense if the gentleman from Vermont (Mr. Sanders) had offered an amendment to say what I just said earlier, that a creditor should never be allowed to increase an interest rate on a debt if, in fact, the consumer is paying that debt based upon the agreed-upon agreement. But I understand how this place works, and I really thought that he had enough support on the other side to at least get this very basic kind of amendment passed, I would say to the gentleman. So I want him to know that I support it. I thank him for bringing it to the floor. But just know I think that sooner or later, we have to correct this injustice.