As the Senate Banking Committee crafts data privacy legislation, the panel’s chairman is signaling that corporate social responsibility will feature heavily in the debate.
Chairman Mike Crapo (R-Idaho) suggested Tuesday that he’ll be taking a close look at how financial services companies do — or don’t — lend to “politically disfavored” industries. The amount of consumer data banks should be allowed to maintain “will likely be informed by whether banks use such data to provide credit services to customers or whether they use such data to boycott certain industries and dictate social policy,” he said.
Crapo’s comments, which he made during a speech at the American Bankers Association Washington Summit, suggest that he is factoring in the debate on how banks and other financial firms lend to the firearms industry as the panel deliberates on widely expected bipartisan data privacy legislation. In his speech, Crapo referred to businesses that are involved in “constitutionally protected industries.”
It’s a new wrinkle in the data privacy discussion for financial firms, which has so far been dominated by debate around credit bureaus.
Political interest in data privacy and financial firms picked up after the 2017 Equifax Inc. data breach that affected about 150 million Americans. In February, House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) held a hearing with the chief executives of the country’s largest credit bureaus, including Equifax, and has proposed a discussion draft of a bill that would overhaul the credit bureau system.
While approaches of that nature are unlikely to gain much traction on the other side of the Capitol, both Crapo and the panel’s ranking Democrat, Sen. Sherrod Brown of Ohio, have identified data privacy as a priority for the year. In February, the duo invited feedback on potential legislation regarding data security.
Crapo and Brown are in the process of reviewing those comments “and determining next steps,” Crapo said during his speech.
But since the close of the comment period on March 15, debate has picked up in the financial policy community about banks cutting off lending to certain industries, largely the firearms industry. Some banks, with prompting from shareholder proposals and socially minded funds, have tried to distance themselves from the firearms industry.
Republican senators have responded: Crapo last week sent a letter to the heads of the country’s largest banks expressing his concern about the trend. Sen. Kevin Cramer (R-N.D.), who also sits on the banking panel, last week introduced the “Freedom Financing Act,” which seeks to address the issue.
It’s a tricky one for the banking industry. After Crapo’s speech, Rob Nichols, president and chief executive of the American Bankers Association, said it doesn’t make sense to “use banks to pick winners and losers in the private marketplace.” He added, however, that “banks can make individual decisions about where they want to or not want to lend.”