RICHMOND, Va., May 3 /PRNewswire/ -- Should a bank be able to share
information about you with other businesses? Some consumer advocates want to
protect the financial privacy of consumers by restricting such information
sharing. Jeffrey M. Lacker, senior vice president and director of research at
the Federal Reserve Bank of Richmond, contends that the issue is immaterial.
By mid-2001, the financial privacy provisions of the Gramm-Leach-Bliley
Act required financial institutions that plan to share nonpublic customer
information with third parties give customers an opportunity to "opt out."
Privacy advocates have argued for a stricter "opt-in" provision requiring
financial institutions to get explicit consent from consumers before sharing
personal information about them. In the Richmond Fed's 2001 Annual Report
feature article, "The Economics of Financial Privacy," Mr. Lacker looks at the
debate between opt-out and opt-in proponents. From an economist's perspective,
it appears to be irrelevant how the rights to privacy vs. information-sharing
are allocated. If sharing customer information is beneficial, banks can pay
customers to refrain from opting out, or they can pay them to opt in. In
either case, the market should deliver an appropriate balance between
consumers' desire for privacy and the economic value of information sharing.
In addition to the feature article, the Richmond Fed's Annual Report
customarily includes information on the Fifth District economy and on the
Reserve Bank's operational and financial activity. One of the most significant
activities during the past year was the Fed's efforts to keep the banking and
financial systems running following the extraordinary events of Sept. 11. The
message from the president and first vice president reflects on the role the
Fed and the banking community played in stabilizing the nation's financial
markets and describes how individuals worked together to maintain operations
without serious disruption.
For copies free of charge, contact the Bank's Public Affairs Department at
(804) 697-8111. Also, visit our Web site at http://www.rich.frb.org/pubs/ar .
SOURCE Federal Reserve Bank of Richmond
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Related links:
http://www.rich.frb.org
http://www.rich.frb.org/pubs/ar
CONTACT:
Jeffrey Lacker, Research, +1-804-697-8279 or
Lisa Oliva, Public Affairs, +1-804-697-8192, both of the Federal
Reserve Bank of Richmond
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