Panel I of a Hearing of the Senate Banking, Housing and Urban Affairs Committee - Measures to Enhance the Operation of the Fair Credit Reporting Act

HEADLINE: PANEL I OF A HEARING OF THE SENATE BANKING, HOUSING AND URBAN AFFAIRS COMMITTEE

SUBJECT: MEASURES TO ENHANCE THE OPERATION OF THE FAIR CREDIT REPORTING ACT

CHAIRED BY: SENATOR RICHARD SHELBY (R-AL)

WITNESSES: JOHN W. SNOW, SECRETARY, DEPARTMENT OF THE TREASURY

BODY:
SEN. MIKE CRAPO: Thank you very much, Mr. Chairman. I, too, want to thank you for holding these hearings. And, Secretary Snow, I want to follow up on one of the answers that you gave to Senator Sarbanes when he went through the list of issues that we ought to be considering here. One of them was the privacy issue.

And I think that raises the whole question of whether the committee should get into the issue of Gramm-Leach-Bliley in the privacy provisions that we deal with. There's a debate as to whether there should be an opt-in proposal or an opt-out proposal adopted with regard to the sharing of information about citizens.

And it's my understanding that the administration has not proposed that we get into that issue. I'd like to clarify that and find out, if not, why the administration does not believe that we should get into that issue at this time.

SEC. SNOW: Because I think it's premature at this time, Senator. We've—that legislation is almost brand new. It's just being implemented. We're just figuring out how it really works and getting acquainted with the ins and outs of Gramm-Leach-Bliley, and the experiment, in effect, that it's put in place.

The experiment that you put in place with the FCRA has had a lot more experience under it. And I think it is an experiment that has clearly proven successful. We know that the results of this experiment are really superb, terrific. With some changes that we're recommending, we think it ought to continue. I don't think we're in that position with Gramm-Leach Bliley yet. That experiment is too new, too young.

So I would urge that we give that more time, learn more from the experience under Gramm-Leach-Bliley, and return to that at some time in the future, but not now.

SEN. CRAPO: I have in front of me a letter from a number of the financial and consumer institutions in Idaho who make the point, from their point of view, that we need to have a much more readily comprehensible and simply executed national privacy notice system so that people can understand what is being done with private financial and medical and other records about them and that they can have an ability to control how that information is utilized.

I understand—I want to be sure that I understand your testimony. You're saying that you think the issue is not right, but not that the issue is not one which we should approach. Is that correct?

SEC. SNOW: Exactly. I think now we should—I would urge you to focus on extending the Fair Credit Reporting Act now, with some of the modifications that have been talked about. And at the same time, I think there's—you know, obviously there's concerns along the lines you're suggesting.

I understand that the regulators are working right now—that is, the financial regulators—at improving those notices, at simplifying those notices, to make them easier to understand and giving the consumers a better sense of what their rights are.

But while it's an issue that needs some attention, I think right now, from our point of view, the priority is on reauthorizing these national standards and making sure they stand in place.

SEN. CRAPO: Well, thank you very much, Mr. Secretary. I think, like most Americans who receive these privacy notices in the mail, I don't know if very many people read them. I, because I sit on the committee and have a responsibility in this area, I actually read every privacy notice that I have an opportunity to look at. And I have concluded that they are either incomprehensible or unbelievably simplistic. I mean, they seem to go from one end of the scale to the other.

But I don't believe that they are accomplishing what we need with our citizens in the United States in terms of their ability to understand their rights and to define what the rights of Americans are with regard to financial information that is maintained about them. So I think we do need to address this issue, and I would appreciate the opportunity to work with you on this as we move forward.

SEC. SNOW: Thank you, Senator.

SEN. SHELBY: Thank you, Senator Crapo. Senator Carper.