Statement of Commissioner Orson Swindle
Dissenting From Part IV of FTC Testimony
on H.R. 10

As contained in the House-passed version of H.R. 10, the Congress wisely decided to study information-sharing practices among financial institutions, their affiliates, and non-affiliated third parties. Section 508 of the House-passed bill directs the Secretary of the Treasury, in conjunction with Federal functional regulators and the Federal Trade Commission, to consult with State insurance authorities, the financial services industry, consumer organizations, privacy groups, and other representatives of the general public to study the issue of information-sharing practices and, within six months, to report to Congress with recommendations for legislative or administrative action. I think that this approach makes good sense.

Unfortunately, the Commission's testimony suggests preempting that study and recommends ". . . that H.R. 10's privacy protections requiring notice and opt-out before personal financial information is disclosed to non-affiliated entities be extended to cover the disclosure of such information among affiliated companies."

The majority believes we must act now, without the benefit of the study. I disagree.

There must be a careful balance between protecting privacy and allowing information-sharing when necessary to serve customers and to preserve the benefits of financial services deregulation. Although protecting consumers' sensitive financial information is extremely important, I believe it is premature to make a blanket recommendation about extending notice and opt-out to cover information-sharing among affiliates without understanding the costs and benefits of such an extension.

The full House of Representatives wisely rejected the majority's approach when H.R. 10 came to the House floor earlier this month. The manner in which personal financial information is and may be used by financial institutions in a deregulated world raises complex issues. Acting without the facts does not serve the public interest and, in the extreme, could impede economic growth, increase the cost of services to consumers, and even negate the intention of H.R. 10 to allow financial institutions to provide a wider array of goods and services to their customers.

The Congress would have been well served had the Commission pointed out the heightened privacy concerns likely created by deregulation, steered clear of a blanket recommendation to impose restrictions on affiliate information-sharing, supported the study that H.R. 10 would require, and suggested that Congress may wish to expedite completion of such a study before taking final action on H.R. 10.

In setting a course for the best possible financial information practices, we should be guided by two common-sense rules:

First, government should look before it leaps. A blanket extension of restrictions on affiliate information-sharing would appear to be an ill-advised leap before we have looked.
 
Second, do no harm. The policies that the Congress adopts for information-sharing practices in the financial industry will have profound consequences. Congress should have the benefit of a full evaluation of the facts and the consequences, both intended and possibly unintended, as quickly as possible and preferably before enactment of the legislation.

I concur in the presentation of this testimony, but I dissent as to the content and message conveyed in Section IV.