REMARKS BY THE PRESIDENT
ON FINANCIAL PRIVACY AND CONSUMER PROTECTION
THE PRESIDENT: Thank you very much, Mari. I just wish we couldhave found someone with a little energy to make this presentation.(Laughter.)
Hillary and I are really delighted to have all of you here, anddelighted to be part of this announcment today, because it's so important.And I would like to say a special word of appreciation to Secretary Rubin.You know, most people think of a Treasury Secretary as someone who's outthere trying to keep the economy going, and he's done a reasonable job ofthat, I think. (Laughter.) And they think of Bob Rubin as this sort ofbig, Wall Street-type brilliant person.
But one of the reasons that I wanted him to come and work here isthat he actually understands how big economic decisions affect individualpeople at all levels of income and all different circumstances in life.And I think it's a good thing for a country to have a Treasury Secretarythat understands the big issues, and then cares about how they impactindividual citizens. And I'm very grateful for that. (Applause.)
I want to thank Senator Bryan and Congressmen Bentsen, Gonzalez,Inslee, Kanjorski, Markey, Lee, Roybal-Allard, and Waters for being here --and Senator Sarbanes, who can't be here, and Congressman LaFalce, who'sdone so much on this, who is here today. And I thank Chairman Levitt,Chairman Pitofsky, Commissioner Thompson, Assistant Attorney General JimRobinson.
Before I get into the substance of our proposals today, I wouldlike to say just a few words about the terrible tornado devastation inOklahoma and Kansas, which I'm sure all of you have seen the reports of,and perhaps even the gripping pictures of.
Some of the most powerful tornadoes ever recorded swept throughthese states last night. At least 45 people are dead, and the wreckage isstill being examined. Whole communities have been leveled. Homes andpossessions have been turned into splinters and rubble.
I have already spoken with the governor of Oklahoma, FrankKeating, to tell him that I've declared Oklahoma a federal disaster area,and we have just completed a similar declaration for the state of Kansas,and I look forward to talking to Governor Graves later today. I had a goodtalk with James Lee Witt, our FEMA director -- who is now in Oklahoma, withBuddy Young, his regional director -- and they are working on what we cando to provide all the necessary support for people.
We have to make sure everyone's accounted for and that thebeginning cleanup can start. Local and state officials, fire and police,emergency services, National Guard personnel have already worked throughthe night, and are doing a terrific job of dealing with an incrediblydifficult situation. We're here talking about how people feel whensomething has been stolen from them. A lot of our fellow Americans havehad everything taken from them in those two states, and I know that theywill be in your prayers.
The people of Oklahoma City, in particular, have suffered toomuch devastation in recent years, and they've been hit very, very hard bythis. So we'll have more to say about that in the days ahead.
I would like to just put this issue briefly into historicalperspective, to emphasize the importance that I feel the entire Congress,without regard to party, should attach to this matter.
We've been at this experiment in Government for 223 years now.We started with a Constitution that was rooted in certain basic values andwritten by some incredibly brilliant people who understood that times wouldchange, and that definitions of fundamental things like liberty and privacywould change, and that circumstances would require people to rise to thechallenges of each new era by applying the old values in practical ways.
This happened at the dawn of the 20th Century. Mari mentionedJustice Brandeis. He said, when we change from being an agricultural to anindustrial society that laws built under simpler conditions of living couldnot handle the complex relations of the modern industrial world.
He and the leaders of the Progressive movement, about 100 yearsago, therefore, fought to adapt our institutions to new markets -- toupdate vital protections for our citizens, to uphold the right to privacy,which Brandeis said was the right most valued by civilized men.
Now, that's what's happening today; we're in the midst of anothervast economic transformation. Once again, the laws that govern dynamicmarkets -- markets so dynamic they could not have been imagined 200 yearsago -- are out of date.
I just read -- just parenthetically -- I read yesterday a quotethat said that 60 years ago, the prices in London for most basiccommodities were the same that they were in 1660, before the outbreak ofthe great London fire. In the last 60 years, most of us have seen pricesgo up a thousand-fold. Thank goodness it hasn't happened in the last sixyears, we're -- (laughter) -- maybe in a different thing.
But the pace of change is very different -- not just the natureof change, but the very pace of it. So once again, we have to respond,applying our oldest values in practical ways that allow them to bepreserved and enhanced in modern times.
We all know that technology and competition have revolutionizedthe financial services industry. I think most of us believe that, by andlarge, these changes have been very good.
But many people, as you've heard, don't have the knowledge toproperly evaluate what is truly a dizzying array of options. Some arefalling victim to new abusive practices. Others are being left out of thefinancial marketplace altogether.
That is why today I am proud to announce our new FinancialPrivacy and Consumer Protection Initiative, to give all Americans both thetools and the confidence they need to fully participate in a thriving buthighly complex 21st century economy.
This initiative is based on five key principles, and it draws onseveral important proposals developed by the members of Congress who arehere today, and some who are not, whom Hillary mentioned.
The first, clearly, is that we have to do more to protect everyAmerican's financial privacy. The Vice President led our efforts toidentify areas where privacy is at risk, and financial areas came up overand over and over again as a matter of great concern.
The technological revolution now makes it easier than ever forpeople to mine your private, financial data for their profit. While someof your private financial information is protected under existing federallaw, your bank or broker or insurance company could still share withaffiliated firms information on what you buy with checks and credit cards-- or sell this information to the highest bidder. This law, to put itmildly, is outdated and should be changed -- to give you the right tocontrol your financial information, to let you decide whether you want toshare private information with anyone else. I look forward to working withmembers in the House and the Senate on this issue.
To enhance financial privacy, we must also protect the sanctityof medical records. With the growing number of mergers between insurancecompanies and banks, lenders potentially can gain access to the privatemedical information contained in insurance forms. So we propose toseverely restrict the sharing of medical information within financialservices conglomerates.
You should not have to worry that the results of your latestphysical exam will be used to deny you a home mortgage or a credit card.There are many other important protections for medical records that oughtto be put in place. Because Congress has given me the authority to act ifit does not do so by August, one way or another, we will protect theprivacy of medical records this year.
Second, we must require greater public disclosure and enhanceevery consumer's right to know. As the First Lady just pointed out --although everyime I hear it I shake my head -- consumers received nearlyfour billion credit card solicitations last year.
Some offers contain new traps for the unwary. For example,sometimes credit card companies advertise low interest rates known asteaser rates, to reel in consumers who then are surprised with unexpectedinterest rate hikes. We believe any marketing of teaser rates for creditcards should include equally prominent notice of their expiration date,their eventual annual percentage rate, and any penalties, that apply.
Millions of consumers have also found out the hard way thatmaking only minimum payments rarely helps retire debt and almost alwaysresults in very large interest payments. So we will require clear noticeof how long and how costly repayment would be if the consumer makes onlythe minimum payment.
Third, we have to do more to combat consumer fraud. As MariFrank discovered the hard way, it is remarkably easy now for a thief totake out huge loans in someone else's name, run up enormous credit carddebts, and tap into bank accounts. Last October, Congress passed -- and Iwas pleased to sign -- the Identity Theft and Assumption Deterrence Act.It's a good law, but we need to give it sharp teeth. So today I'minstructing the Treasury and Justice Departments to give higher priority tocases involving identity theft, particularly those involving organizedcrime groups, with the goal of increasing the number of prosecutions, bothat the state and federal levels. And Treasury will convene a nationalsummit on identity theft and work with the private sector to make it harderto steal someone else's identity in the first place.
We'll also crack down on fraud committed over the Internet. Ifwe want to seize the Internet's full potential we have to stay ahead ofthose who would use this open medium to manipulate stock prices, commitfraud in on-line auctions or perpetuate any other type of financial scam.That's why I've asked the Justice Department to step up prosecutions, todevelop a national center for tracking Internet fraud, and to train state,local and federal law enforcement officers on how to recognize and root outthese schemes.
I find that law enforcement, compared to people who are doingcriminal activity in this area, are rather like parents trying to keep upwith their children on the computer. (Laugter.) It is an endless effort,and we need to organize and systematize a continuous training andretraining effort so that we can stay ahead of the curve.
Chairman Levitt is launching an expanded effort to arm investorswith the information they need to protect themselves against onlinesecurities fraud. Listen to this: complaints of Internet fraud havetripled in the past six months. Just in the last six months. Therefore, Iwill work with the congress and Chairman Levitt to provide the additionalresources for the SEC necessary for enforcement, beyond what I have alreadyrequested in our balanced budget.
Fourth, we must provide financial services for those who havebeen denied access to credit and basic banking services for too long.Today I'm proud to announce that the Treasury Department will soon makeavailable, through private banks, low-fee bank accounts for those whoreceive federal benefits like Social Security.
Unfortunately, there are some in Congress who would have useffectively limit, rather than expand, access to financial services inunderserved communities. As the Senate debates this issue this week, Iwant to reiterate what I said in my veto letter to Congress. We willoppose any effort to weaken or undermine the continued relevance of theCommunity Reinvestment Act. (Applause.)
While that act has been on the law for well over 20 years now,over 90 percent of the lending under it has occurred in the last six years,in our administration. I'm very proud of that. It has not done anythingto hurt bank profits, and we ought to stay with it. (Applause.) I knowthat leaders of the civil rights community spoke today on this subject, andI just want to applaud them and to encourage them to stay at it.
Finally, as has already been said, we have to increase thefinancial literacy of the American people. It's no enough to know how tobalance a check book anymore. Even those fortunate to have the help ofaccountants sometimes have a hard time understanding all the ins and outsof investing in an IRA, paying off credit card debt, or refinancing amortgage.
So today I'm directing my National Economic Council -- GeneSperling is here today with us -- to work with our agencies to develop aplan to help all Americans improve their financial literacy. I thinkHillary said, it adds a year of income to people if they have this kind oftraining in high school.
School is, of course, the best place to start learning aboutpersonal finance. The Department of Education will help all our schoolsfind effective lesson plans and other tools to integrate financial literacyinto their basic curriculum.
So that's what we're trying to do: protect privacy, enhancedisclosure, combat fraud, increase access, expand education. Theseprinciples are the same ones we used to harness the power and benefits ofthe industrial revolution. They are just as vital today, if not more so,than they were a century ago. It's time now to use them to seize theenormous potential of the information revolution for every Americancitizen.
If we work together we can help all our families have thebenefits of new choices and new technologies. We can help our peoplethrive in the 21st Century, and all we have to do is to remember how we gothere over the last 200 plus years. Thank you very much. (Applause.)
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