You can't be a successful lawyer and not work for banks, Hillary Clinton once said in defense of her shenanigans as a Little Rock lawyer on behalf of the Madison Savings and Loan. Or a senator from New York, or a president of the United States, her husband might have added.
Last Friday, the White House photo op offered a broadly smiling President Clinton surrounded by Fed Chairman Alan Greenspan and other financial movers and shakers as Clinton signed the Financial Services Modernization Act into law. With that flourish of his pen, Clinton gave the fat cats of Wall Street everything they've long wanted, sweeping away consumer safeguards enacted at the time of the Great Depression, suddenly making it legal for banks, insurance companies and stockbrokers to affiliate as one company.
Clinton also granted these new conglomerates the power to collectively exploit the information their varied affiliates have collected on their customers--health records, stock transactions and credit histories, for example--shredding the basic American right to privacy.
"The White House really pulled the rug out from under consumers by agreeing to weak privacy provisions in the banking bill," said Rep. Edward J. Markey (D-Mass.). He, along with conservative Sen. Richard Shelby (R-Ala.), unsuccessfully tried to amend the financial bill by requiring consumer approval before private information was bandied about.
Clinton uttered some vague promises about backing stronger privacy protection in the future, but the broad smile on his face as he signed this giveaway to Wall Street made his priorities all too clear. The financial interests that dumped more than $300 million into the passage of this bill--the most expensive lobbying effort in history--are essential to Hillary Clinton's U.S. Senate campaign. No one gets elected from New York who doesn't play ball with Wall Street interests. That is why New York Democratic Sen. Charles E. Schumer, a big Hillary backer, so strenuously lobbied Clinton to sign this law.
Also, the president has got to repay the loyalty of Robert Rubin, his former Treasury secretary, who stood by Clinton during his time of personal troubles. Rubin has become co-chairman of Citigroup, a conglomeration between Citibank and Travelers Insurance that immediately benefits from this new legislation, which was strongly backed by Rubin and his Treasury Department and for which he lobbied in the months following his resignation.
Without this law, Citigroup would have had to divest some of its lucrative insurance business. Surely there needs to be an investigation as to whether Rubin violated federal conflict-of-interest rules by urging White House support for this bill while in negotiation for his new job. But one will not hear a call for such investigation from Republican or Democratic leaders in Congress, who have been major recipients of Wall Street funding in return for supporting this bill. Nor from the leading presidential candidates of either party, who feed at the same trough.
In signing this law, Clinton offered a pretense of concern for consumer privacy and promised his Treasury Department would come up with a new package of consumer protection to right this wrong. What rubbish! By signing the bill, this lame duck president gave away whatever leverage he had over the banking interests and their power block in Congress.
As Markey put it: "This was the perfect opportunity to protect the little guy, the average consumer, because the big boys in the financial services industry wanted the banking bill so badly. Now we have to start all over again, and it's not going to be easy. But we can't stop fighting until every American has the privacy protections they deserve."
The fight for privacy now hangs on passage of HR3320, the "Consumers' Right to Financial Privacy Act" sponsored in the House by Markey and Joe Barton, a conservative Texas Republican. Shelby and Richard Bryan (D-Nev.) introduced an identical bill, S1903, in the Senate. This legislation asserts this very clear principle: "Financial institutions would have to notify consumers before sharing their personal information, provide the consumer access to that information to confirm its validity, and most importantly, would have to gain express consent from the consumer before any personal information could be shared." Failure to comply would carry civil and criminal penalties.
This same privacy legislation also can be passed by the states and, thanks to a loophole in the Financial Services Modernization Act, would supersede the federal law. If that happens, the victory that the banks are now gloating over may prove to be somewhat pyrrhic. A candidate's support for this privacy legislation should be a voters litmus test to determine whether those who presume to represent them value consumer privacy over bank profits.