SACRAMENTO — Consumer groups launched a ballot measure campaign Wednesday aimed at banning banks and insurance companies from sharing details of their customers' finances.
The threat of a March 2004 initiative increases pressure on the Legislature, where the banking industry helped kill a financial privacy bill last summer despite polls showing that consumers overwhelming support such a law. A similar measure passed the state Senate on March 3 but faces an uncertain fate in the Assembly.
"If lawmakers once again fail to act," said Consumers Union policy analyst Shelley Curran, "we'll be ready with a ballot measure to take directly to the voters of California so that they can enact the reforms that they want and deserve."
Last year the banking and insurance industries hired dozens of lobbyists to prevent California from passing what would have been the nation's toughest financial privacy law. The current bill is weaker, but the threat of a ballot measure could escalate the stakes. Backers of the Financial Privacy Act of 2004 say they expect the industry to spend as much as $20 million to attempt to sway voters.
Fred Main, senior vice president of the California Chamber of Commerce, said businesses would rather find a compromise in the Legislature than fight an initiative. The ballot measure campaign has already attracted a $1-million donation from an executive of E-Loan, a money-lending company that competes with banks and supports tighter privacy restrictions.
"If you've got a million dollars in the bank and you can qualify a ballot measure," Main said, "it's something to be taken seriously."
Initiative backers say they intend to gather the necessary 373,816 signatures in coming months, all the while hoping that the Legislature makes the effort unnecessary by passing a tough financial privacy law.
They say they cannot hope to raise as much money as the banks and insurance companies for an election campaign. But given public sentiment, they say, they won't need it.
A poll of 426 voters in January by the Consumer Federation of the California Education Foundation found that 71% would strongly support an initiative to make businesses get consumer permission before selling any financial information. (The margin of error is plus or minus 5%.)
"We believe that if left unchecked," said E-Loan Chief Executive Officer Chris Larsen, "the increasing consumer fears about who controls our most sensitive data will prove devastating to consumer confidence in our financial system and our economy broadly."
