Pubdate: Thur, 04 Feb 1999 Source: Ft. Worth Star-Telegram (TX) Copyright: 1999 Star-Telegram, Fort Worth, Texas Contact: http://www.star-telegram.com/ Forum: http://www.star-telegram.com/comm/forums/ BILLS WOULD BAR BANKS FROM INVADING PRIVACY WASHINGTON -A proposal by banking regulators that banks keep closer tabs on customers has become a national privacy issue, prompting a Texas lawmaker to introduce legislation to block the rules. The proposed regulations, called "Know Your Customer," would require financial institutions to develop customer profiles, monitor accounts and report any unusual activity, such as large deposits or withdrawals. They were designed to spot the flow of illegal drug money or money laundering. "These rules are more like `Spy on Your Neighbor' and I have not met anyone who likes them," said Rep. Ron Paul, R-Surfside, who introduced a package of three bills yesterday to provide "financial privacy." "The subject is very dear to my heart, not just financial privacy but privacy in general," Paul said at a news conference in his office. Paul was the Libertarian Party's presidential candidate in 1988 - when he was not in the House - and is an advocate of limited government. "This to me is such an outrage," he said of the proposed rule. Such diverse groups as the American Civil Liberties Union and the American Bankers Association have criticized the proposal. The Texas Bankers Association was an early critic of the proposal. "It is very troubling," said John Heasley, general counsel of the bankers' group. "How do you think customers are going to react? The potential for invasion of privacy is huge." Paul, a member of the House Banking Committee, introduced legislation that would prohibit the agencies from issuing the rules; terminate the Bank Secrecy Act, which gives the government investigative powers; and give customers the right to files in a database developed by the Treasury and the Internal Revenue Service. Paul helped publicize the rules when they were proposed late last year and has drawn national attention to the move by the banking agencies. Steve Katsanos, spokesman for the Federal Deposit Insurance Corp., said the agency has received more than 15,000 comments on the proposal. "Very few of the comments have been supportive," Katsanos said. The four agencies involved in the rule-making - the Federal Reserve System, the Comptroller of the Currency, the Office of Thrift Supervision and the FDIC - are now reviewing the comments, which are due by March 8. There are signs that the regulators are re-thinking the approach. Last week, FDIC Chairman Donna Tanoue said, "It's evident to me personally that we're going to have to do something different than was proposed." - --- MAP posted-by: Don Beck