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Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release November 9, 2005 #05-85
E-mail: [email protected]

ACB STRONGLY ENDORSES DATA SECURITY LEGISLATION

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WASHINGTON, D.C. — ACB strongly endorses H.R. 3997, The Financial Data Protection Act of 2005, as “a common sense approach that provides a meaningful solution to data breaches and addresses the problem, not the symptom.”

Josie Callari, senior vice president of Astoria Federal Savings in Lake Success, N.Y., and chairman of ACB’s Electronic Banking and Payment Systems Committee, told today’s hearing of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit that H.R. 3997 “protects consumers, helps to prevent the abuse of consumer information, and gives companies an incentive to do the right thing, while maintaining maximum flexibility for all types of businesses.”

The bill embraces three ACB priorities for data security legislation. It creates a national standard; exempts institutions subject to existing Gramm-Leach-Bliley Act data security requirements; and puts enforcement for banks with the federal banking regulators. The bill also begins to deal with a fourth ACB priority — reimbursing banks for their costs when data security breaches occur elsewhere.

Callari argued in favor of a national standard, warning that “a Balkanized patchwork of state laws that provide protections that stop and start at state lines will not provide meaningful protection for consumers in a national marketplace. Consumers deserve uniform protection, and ACB believes that the Congress has an obligation to provide it,” she said.

ACB noted that the Gramm-Leach-Bliley Act (GLBA) already requires financial services companies to have in place much of what is being considered in most data security legislation. “Title V of GLBA requires financial services companies to implement data security safeguards, a customer response program, and a comprehensive privacy policy. This spring the banking regulators issued guidance extending Title V to require customer notices in case of a breach that puts consumers at risk. To layer a duplicative regulatory system on top of this robust framework would only increase costs for financial institutions, and ultimately their customers,” Callari declared.

Callari added, “the banking regulators regularly examine financial institutions to ensure safety and soundness and consumer protection. ACB applauds H.R. 3997 for embracing this existing framework by vesting enforcement” with the functional regulators.

“This will result in both a more efficient regulatory structure and more uniform consumer protections,” Callari said.

She rejected the notion that enforcement should be vested with the states. “This would lead to uneven enforcement, where enforcement might depend on arbitrary local considerations rather than a uniform, predictable approach to national enforcement.

“As a banker I have grave concerns about such a system because it could infringe upon the principles of the dual chartering system for financial institutions,” she added.

Callari also urged that “that those who are responsible for a data breach must be responsible for the costs of protecting consumers from risks arising from the breach.” She noted that it can cost a community bank up to $15 to replace a credit or debit card. In instances where a community bank has thousands of cards affected, these costs can mount quickly, and the institution ends up bearing all of the costs itself. “Those responsible for the breach should bear the costs,” she said.

Click here to read the testimony.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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