State assembly committee rejects financial privacy bill again

By TOSHI MAEDA
Associated Press Writer

SACRAMENTO (AP) A state Assembly committee rejected a bill Tuesday designed to ban financial institutions and insurance companies from sharing customers' private information without their permission.

The bill died in the Assembly Banking and Finance Committee by a 3-3 vote. The bill needed seven votes to clear the 12-member committee.

Five members abstained, including Assemblyman Ronald Calderon, D-Montebello, who initially was the only Democrat opposed to the measure but later withdrew his vote, according to committee chair Assemblywoman Patricia Wiggins, D-Santa Rosa. One member left before the vote was taken.

The bill would have created the strongest financial privacy protection law in the country, expanding on federal law and giving consumers more control over information such as bank balances, spending habits and payment history.

It is the fourth time the measure has failed, but the bill's author, Sen. Jackie Speier, D-Daly City, said she was not ready to quit. She said she would ask the committee to reconsider the bill.

``It may have been a bad day for the consumers in California but it is not the last day for them,'' Speier said. ``The battle isn't over.''

Speier said the industry had spent $20 million lobbying since 2000, a figure industry spokesmen said was inflated.

The committee room was packed with more than 100 people, with the majority speaking against the bill. Industry groups said the measure would cost customers more and hurt small firms that don't have the affiliates that larger companies could continue to share information with under the legislation.

``This bill will make big financial losers and winners,'' Lou Correa, D-Anaheim, who abstained from the vote. ``I am not ready to support this bill.''

The bill would let people opt out of having their financial records shared or sold between companies without their written permission. Companies that unlawfully shared information could have been fined $2,500 per violation, up to $500,000. Fines could be higher if the violations were intentional or led to identity theft.

Joan McNabb, director of the State Privacy Office, testified on complaints the office receives each day from Californians who report privacy violations, many of those about financial institutions.

Gov. Gray Davis, who supported the bill, will offer to help Speier get the bill passed, said Daniel Zingale, secretary of the governor's Cabinet. He said they would focus on the five Democrats who abstained.

``We have a shot at them next time around,'' Zingale said.

If the bill ultimately is killed, consumer advocates who supported it vowed to put a tougher measure on the statewide ballot initiative in March.

``Voters will no doubt do what the committee today failed to do pass a strong privacy measure,'' said Steve Blackledge, legislative director of the California Public Interest Research Group.

^ =

On the Net:

Read the bill, SB1, at http://www.senate.ca.gov

(Copyright 2003 by The Associated Press. All Rights Reserved.)