WASHINGTON -- A top regulator warned banks to stop what he called the abusive practice of selling customers' personal data to telemarketing firms or face possible action by Congress.
Comptroller of the Currency John D. Hawke Jr., who oversees nationally chartered banks, said Monday the practice by a few banks raises "serious legal concerns," which his office and other federal banking agencies are examining."Judging from the calls we receive from state attorney(s) general offices around the country, the scope of the concern may be widespread," Hawke said in a speech at a meeting of bank loan officers in San Francisco. A text of the speech was released in Washington by his office, which is part of the Treasury Department.
He said sales by banks of their customers' financial data also raises questions about preserving consumers' privacy.
"One must be troubled about the implications of this practice for the preservation of customer confidence in the confidentiality of the bank-customer relationship," Hawke told the bankers.
"While it might be unfair to burden an entire industry with legislation aimed at curbing the poor conduct of a few (banks), the persistent failure of the industry . . . to address abusive conduct creates a fertile seedbed for legislation," he said.
Sam Eskenazi, a spokesman for Hawke's office, declined to specify how many banks engage in the practice.
Spokesmen for the American Bankers Association were unavailable for comment on Hawke's speech. Spokesmen for the Bankers' Roundtable, a group representing the nation's biggest banks, didn't immediately return a telephone call requesting comment.
Hawke's comments came as Democratic lawmakers push legislation that would give consumers the right to stop affiliated banks, brokerage firms and insurance companies from sharing personal financial data.
Banks and most of the financial services industry oppose a bill by Rep. Jay Inslee, D-Wash., which would allow consumers to "opt out" of personal data-sharing among affiliated financial companies by notifying the firms in writing.