Editorial: Hope still exists for privacy

One of the principal fears of legislation that will overhaul the nation's financial services industry is its failure to adequately protect privacy rights. Congress passed legislation last week that will allow banks, securities firms and insurance companies to merge. But as these companies combine, they want to share specific -- and quite sensitive -- customer information they possess.

The legislation will permit outrageous abuses, such as the swapping of personal data -- including Social Security numbers and medical records -- that no one other than the customer should see. For instance, there would be nothing to stop a mortgage company from getting access to an affiliated insurance company's medical records and using them to deny a home loan application from an individual who had the misfortune of being a customer of the two affiliated companies. In sum, privacy rights will be ripped to shreds.

Unfortunately neither Congress nor President Clinton were swayed by arguments articulated by Sen. Richard Bryan, D-Nev., and a few others in Congress that the legislation should include a provision that affiliated companies couldn't swap this information unless first getting the permission of the customer. The votes to pass the legislation without privacy protections were lopsided and a testament to the clout of the financial services industry: 90-8 in the Senate and 362-57 in the House.

Still, there might be some hope after all. Sen. Paul Sarbanes, D-Md., tucked inside the legislation a little-noticed provision that will allow the states individually to set tougher privacy requirements than those set by Congress. It would have been preferable to have Congress set one standard protecting privacy rights for all Americans, but at least an alternative exists for states to set reasonable protections. Industry lobbyists told the Washington Post last week that Sarbanes' amendment is in conflict with another federal law that limits the power of the states to establish their own privacy guidelines, but some states already are gearing up to pass legislation.

Nevada, which has had a long history of protecting individual rights, should pass legislation that prohibits the sharing of this information unless a customer gives his permission. To permit these huge financial conglomerates to trade such personal data without the knowledge of the consumer is wrong and endangers our privacy.

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