News

By MARCY GORDON, AP Business Writer

WASHINGTON (AP) via NewsEdge Corporation -

Federal regulators are seeking public comment on rules spelling out
how banks, brokerages and insurers under the same corporate roof must
give customers the right to block them from sharing personal financial
data.

An example: banks would not be able to deny consumers credit or charge
them higher interest because they asked for their data not to be
shared.

The new rules were published Friday by the Federal Reserve, the
Federal Deposit Insurance Corp., the Office of the Comptroller of the
Currency and the Office of Thrift Supervision. The latter two agencies
are within the Treasury Department.

Comments from the public are due by Dec. 4.

``You have a very limited right to privacy'' under the new rules, said
Edmund Mierzwinski, consumer program director for Public Interest
Research Group. Still, he added, ``I would strongly encourage all
consumers to take advantage'' of their right to request that certain
kinds of data not be shared.

These include credit history, income information, employment history
and marital status _ in general, all data related to a consumer's
creditworthiness, available credit, character, general reputation,
personal characteristics or mode of living, according to a news
release issued by the four agencies.

Under the proposed rules, financial companies wishing to share such
information with affiliated firms must first give consumers a notice
telling them of their right to block such sharing by written request,
the release says. They also would be required to give consumers ``a
reasonable opportunity and convenient means to exercise this right,''
it says.

In contrast, consumers would not have the right to prevent the sharing
of their checking account history and other data related to
transactions.

The banking industry is ``going to look at this a little bit harder
and participate in the rule-making process,'' said Catherine Pulley, a
spokeswoman for the American Bankers Association.

The new financial ``supermarkets'' were allowed by sweeping
legislation enacted last November that removed Depression-era barriers
and allowed banks, securities firms and insurance companies to enter
each other's businesses.

Supporters of the change, including the Clinton administration, have
said one-stop shopping for checking accounts, loans, insurance
policies, mutual funds and other investments will save American
consumers some $15 billion a year in fees and commissions and give
them greater choice and convenience.

But consumer groups and privacy advocates have worried that, for
example, people applying for loans from their banks could be turned
down because the loan officer found out from the affiliated insurance
company that the applicant has cancer or AIDS.

The new rules are designed to implement last November's law, which
requires that consumers be allowed to stop financial institutions from
sharing or selling their personal information.

Newly affiliated banks, investment firms and insurers want to share
customers' personal data because it can help them find potential
customers for new products in their marketing campaigns. The financial
companies sometimes are joined in the same corporate group with
retailers, publishers and other kinds of companies.

Comments on the proposed rules can be sent to Mary M. West, Federal
Reserve Board Clearance Officer, Mailstop 97, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.

Federal Reserve Board: http://www.federalreserve.gov

Federal Deposit Insurance Corp.: http://www.fdic.gov