WORLD SAVINGS BANK, FSB
1901 Harrison Street
Oakland, California 94612-3587
March 30, 2000
Manager, Dissemination Branch
Information Management & Services Division
Office of Thrift Supervision
1700 "G" Street NW
Washington, DC 20552
Attention: Docket No. 2000-13
Robert E. Feldman
Attention: Comments/OES - RIN 3064-AC32
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
Federal Trade Commission
600 Pennsylvania Avenue NW
Washington, DC 20580
Attention: Gramm-Leach-Bliley Act Privacy Rule, 16 CFR Part 3113 - Comment
Ms. Jennifer J. Johnson
Board of Governors of the Federal Reserve System
20th and Washington Street, NW
Washington, DC 20551
Attention: Docket No. 00-05
Office of the Comptroller of the Currency
250 E Street, SW
Washington, DC 20219
Jonathan C. Katz
Securities and Exchange Commission
450 - 5th Street, NW
Washington, DC 20549-0609
|RE:||Privacy of Consumer Financial Information, Proposed Rules
FRB Docket No. R-1058
OCC Docket No 00.05
FDIC: Attention: Comments/OES
OTS: Docket No. 2000-13
GLB 65 Fed. Reg. 11173 (March 1, 2000)
SEC File No. S7-6-00
Dear Sir or Madam:
World Savings Bank FSB, headquartered in Oakland, California ("World FSB") is pleased to have the opportunity to comment regarding regulations concerning consumer privacy which are being proposed by the above-referenced federal regulatory agencies pursuant to the provisions of the Gramm-Leach-Bliley Act (the "Act").
World FSB is commenting on behalf of itself, its parent Golden West Financial Corporation, a Delaware Corporation ("Golden West"), and its affiliates World Savings and Loan Association, a Federal Savings and Loan Association, headquartered in Oakland, California ("World FSLA"), World Savings Bank SSB, chartered by the State of Texas with headquarters in Austin, Texas ("World SSB"), Atlas Mutual Advisors, Inc., Atlas Securities, Inc. ( a California corporation) and Atlas Assets, Inc. (a Maryland corporation), all headquartered in San Leandro, California (collectively known as "Atlas"), World Savings Insurance Agency ("WSIA"), an Insurance Agency headquartered in Oakland, California and licensed to do business in five states, and World Mortgage Company (a Colorado corporation) headquartered in Oakland, California, that does business as a mortgage loan broker in 14 states. All of these entities are known collectively as the "Golden West Affiliates".
Each of the Golden West Affiliates will be subject to the rules regarding consumer privacy proposed by at least one of the above-referenced federal regulatory agencies, and therefore this letter is jointly addressed to all of them.
Golden West's three thrift subsidiaries have combined assets of over $42 billion, and currently operate deposit branches in eight states. These thrift affiliates serve an aggregate of more than 550,000 households and have combined deposit accounts totaling more than $27 billion. Additionally, in 1999 Golden West's affiliates originated more than 80,000 mortgage loans in 28 states and the District of Columbia, and currently service more than 300,000 loans. Atlas serves more than 68,000 accountholders, and WSIA serves more than 22,000 policyholders.
The Golden West Affiliates support the increased privacy protections offered to consumers and to customers of financial institutions as contained in the proposed regulations. We believe that the provisions of the proposed regulations offer consumers and financial institution customers valuable increased protections. While there are many provisions of the proposed regulations on which comment was solicited, we are concerned that some of the provisions may not be as effective as possible, and that some provisions place an undue burden on financial institutions without increasing consumer protection. We have therefore limited our comments to a few of the proposed provisions that most concern us.
Effective Date; Safe Harbor; Transition Rule
The agencies seek comment on whether an effective date six months after adoption of the final regulations will give financial institutions sufficient time to come into compliance. We believe that an effective date 12 months after adoption of the final regulations will allow financial institutions more opportunities to review and revise their policies, procedures, systems, forms and training, thus increasing their ability to refine their approach to compliance and more comprehensively protect the privacy of consumers and customers. The shorter proposed six month period will necessarily result in a less detailed approach; a longer 12 month period will result in a more thoughtful and better conceived approach.
Given the complexity of the new regulations, we believe that the final rules should provide some protection for financial institutions that make a good faith effort to properly and fully comply by the deadline.
We further suggest that after the initial adoption of the final regulations, the agencies consider adoption of a system similar to that used in making changes to Regulation Z, in which changes to the regulation become effective on the first day of October which first follows by six months issuance of the final rule. (See Section 105(d) of the Truth-in-Lending Act). This system is well-recognized by both financial institutions and consumers, would allow financial institutions to coordinate changes to privacy regulations with changes to Regulation Z, and thus would necessarily result in a more thoughtful and comprehensive approach to protecting consumer privacy.
Relationship to Other Federal Regulations
We suggest that wherever possible the agencies coordinate the provisions of the privacy regulations with similar provisions in other federal regulations and with each other. Coordination of regulatory provisions will result in efficiencies for affected financial institutions as well as create a uniformly understandable system for consumers. These efficiencies will lessen the not inconsiderable burden of compliance on financial institutions, as well as create an environment in which consumer privacy can be more thoughtfully and comprehensibly viewed by financial institutions, resulting in a better and more consumer-friendly approach to compliance. Examples of such coordination include:
While we appreciate that the regulatory agencies do not have the power to pre-empt conflicting state laws, we are very concerned with the serious adverse effect on commerce that the combination of a complex federal regulation together with conflicting state laws will have. We therefore respectfully suggest that the federal agencies consider an effort to coordinate state privacy laws (perhaps through a Council of State Advisors) or approach Congress about reconsidering pre-emption.
Opt-Outs/Joint Accountholders and Affiliated Institutions
The agencies solicit comment on how the right to opt out should apply to joint accounts. We would like expand our comment to include not just the issue concerning joint accountholders, but also similar issues concerning multiple accounts and affiliated financial institutions. A few operational questions will serve to illustrate the almost endless complexity of this issue. Is a single opt-out disclosure sufficient if there are joint accountholders? Can more than one account with commonality of accountholders be included in a single opt-out notice? Is a single disclosure or opt-out form sufficient for providing notice to an individual (or joint) accountholder who holds accounts at two or more affiliated institutions? What are the rules for custodial and similar accounts? These examples illustrate the almost endless variations which the request for comment suggests the proposed regulations address.
We respectfully suggest that the agencies provide financial institutions the option of determining which methods of disclosure and means of exercising the right of opting-out will best serve the privacy interests of its customers and consumers, and best fit within the corporate structure and systems capabilities of a given institution. We endorse the agencies efforts to recognize these concerns by soliciting comments, and encourage the agencies to provide the financial institutions the flexibility to address their unique customer concerns within the framework established by the Act.
We note with general approval the care taken in drafting the Act in regard to exempting secondary market transactions from those provisions which would provide no benefit to consumers and which would unnecessarily complicate ordinary business transactions. However, we wish to caution the agencies that equal care should be taken to ensure that unaffiliated third party participants in mortgage transactions are not inadvertently allowed to share consumer or customer information without having to provide privacy notices or opt-out opportunities. The inadvertent creation of such "loophole" exceptions for mortgage insurance companies, title insurance companies, appraisers, and the like would not only be a disservice to customers and contravene the spirit of the Act, it would put those financial institutions who are required to comply at a competitive disadvantage.
In conclusion, we respectfully suggest that a twelve month period elapse between the date the proposed regulations are made final and the date by which compliance becomes mandatory in order to allow financial institutions to more comprehensively and thoroughly address the privacy concerns of their customers; that a short safe harbor period be provided; that to the extent possible the proposed privacy regulations be made consistent with existing relevant federal regulations and with each other in order to ease the burden of compliance on financial institutions and avoid confusing customers; that financial institutions be provided the option of determining which methods of making disclosures and of opting-out best serve the privacy concerns of their customers as well as ease the burden of compliance by recognizing that different financial institutions have different corporate structures and differing systems capabilities; and finally that no inadvertent "loopholes" be created for third party mortgage industry participants.
Again, we appreciate the opportunity to comment on the proposed regulations.
Very truly yours,
(s)David S. Madsen
Senior Vice President