Sen. Shelby: Financial Reform Violates Privacy

May 6, 2010 - 5:45 PM
Sen. Richard Shelby (R-Ala.), senior Republican on the Senate Banking Committee, said that provisions in the new financial regulatory bill violate privacy rights by allowing the government to collect any financial information it wants from any financial institution it wants.

Sen. Richard Shelby (R-Ala.), senior Republican on the Senate Banking Committee

(CNSNews.com) – Sen. Richard Shelby (R-Ala.), senior Republican on the Senate Banking Committee, said that provisions in the new financial regulatory bill violate privacy rights by allowing the government to collect any financial information it wants from any financial institution it wants.
 
Shelby, speaking at a press conference outlining Republican concerns about the financial regulatory overhaul, said that the bill violated Americans’ privacy rights by allowing the government to collect any financial information from any financial firm.
 
“I’m sure the ACLU – because we’ve heard from them – and others are looking at this very closely. I believe that it violates a lot of people’s privacy,” Shelby said.
 
Shelby added that Republicans would offer amendments that would attempt to “surgically strike” such objectionable provisions.
 
Republicans’ privacy concerns stem from the new information-gathering authorities the bill would give to the federal government, allowing it collect any information, including records from Automatic Teller Machines (ATM) and the addresses of depositors, from any financial institution at any time.
 
One such entity, the Office of Financial Research, is empowered to collect “any data or information” from any financial organization or federal regulator. One of those regulators, Shelby pointed out, would be the Bureau of Consumer Financial Protection (BCFP), which is empowered to collect a person’s ATM receipts and the addresses of depositors.
 
“The Democrats’ new bureaucracy poses a threat to our privacy,” Shelby said, “Under section 1022 of their bill, the new bureau would collect any information it chooses from businesses and consumers including personal characteristics and financial information.
 
“Individuals could be required to provide the new agency with written answers--under oath--to any question posed by the bureau regarding their personal financial information.”
 
This information along with all other information collected by federal financial regulators can be used by the Office of Financial Research to monitor the entire financial system for so-called systemic risk.
 
The Office of Financial Research would serve as the brains behind the Financial Stability Council, which may request “the submission of any data and information” from either the office or another regulator like the BCFP.
 
“The Office may, on behalf of the Council, require the submission of periodic and other reports from any financial company for the purpose of assessing the extent to which a financial activity or financial market in which the financial company participates, or the financial company itself, poses a threat to the financial stability of the United States,” says the bill.
 
If banks don’t comply, they can be subpoenaed by the director of the Financial Stability Council.
 
Democrats saw no problem with the broad information-collecting powers in their bill. Sen. Jack Reed (D-R.I.) said that there “wasn’t any 4th Amendment issue” in allowing the government to collect any financial data it wants.
 
The 4th Amendment protects against “unreasonable searches and seizures” by the government. Reed said that the nation “desperately” needs to have the government monitoring the inner workings of the financial industry, arguing that if government couldn’t collect any information it thought it needed, regulators would be “flying in the dark.”
 
Sen. Bob Casey (D-Pa.) told CNSNews.com that if privacy issues arose as a result of the new collection powers, then Congress would deal with them at that time.
 
“I agree [with Reed]. I don’t see it,” Casey said. “If we get a bill passed, and it gets implemented and an issue arises that someone believes is an infringement on privacy, we’d certainly consider that and analyze that.”
 
CNSNews.com pressed Casey about exactly what activities would be prevented under the bill, pointing out that fraud is already illegal under federal law. Casey could not name any specific banking practice that the new bill would put a stop to or protect consumers from.
 
“The principle benefit of it is [that] it will hold firms, entities, and individuals accountable on Wall Street that have been allowed to run wild for a long time,” Casey said.