Privacy of Consumer Financial Information
Proposed New Regulation; Comments Due March 31
February 25, 2000
Circular No. 11231

To All State Member Banks, Bank Holding Companies, Edge and Agreement Corporations, and U.S. Branches and Agencies of Foreign Banks in the Second Federal Reserve District:

The following is from a joint statement by the federal banking regulators:

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision have published for comment a proposed regulation implementing the privacy provisions of the Gramm-Leach-Bliley Act. The proposed rule pertains to all institutions regulated by the four federal agencies.

Comments are requested by March 31, 2000.

The proposed rule, the result of an interagency effort, would require financial institutions to provide initial and annual notices of their privacy policies to all customers. In addition, the proposed rule would implement the privacy provisions under the Gramm-Leach-Bliley Act regarding the disclosure of information that is considered private -- termed "nonpublic personal information" in the new law -- to third parties that are not affiliated with the financial institution. Generally, under the proposal, before disclosing nonpublic personal information to a nonaffiliated third party, a financial institution must provide a description of its privacy policies and an opportunity for consumers to opt out of the disclosure except where the disclosure is necessary to service or process consumer transactions.

The agencies each approved publication of this proposal during the past two weeks, and the document published in the Federal Register contains only minor changes from the version approved by each agency.

The proposed regulation (pdf - 396kb), as published in the Federal Register of February 22 by the four federal agencies is available as a PDFfile. Comments should be submitted to the Board of Governors, as specified in the notice, by March 31, 2000.