California employers and business owners are complaining, with good cause, about the cumulative effects of recently enacted legislation that imposes heavy new costs on their operations, and the prospect that more "job killer" bills are rolling through the Legislature this year.
The measures add many billions of dollars to the overhead of California business and could make it increasingly difficult for the state to attract job-creating investment as it competes with other locales.
That said, it's difficult to understand why state Sen. Jackie Speier's financial privacy bill is being included in the list of business-unfriendly measures. It does not, contrary to claims of opponents, impose onerous costs on legitimate business operations. It merely requires financial firms, such as banks and insurance companies, to treat their customers' personal financial data just as they treat their customers' money.
Banks don't own the money that their depositors keep in checking and savings accounts; they merely hold it and disburse it as those customers direct. Neither do they own -- or at least shouldn't act as if they do own -- the information that accompanies those accounts. And the data, too, should not be distributed without their customers' permission.

Another analogy is our assumption, cloaked in law, that what we tell our physicians, or ministers, or lawyers is held in strict confidence. Those of us in journalism, to continue the comparison, treat information passed to us by confidential informants in the same way. If you're not willing to go to jail to protect the identity of your sources -- and many journalists have done so -- you shouldn't be in this business.

Ironically, the business groups that object to Speier's contention that personal financial data should be distributed only with permission are the same groups that have been strenuously resisting the notion that confidential settlements of lawsuits should be made public.

Enough said. No rational person should object to the simple principle that one's financial data are one's personal property and the holders of that information should respect that ownership. Its ownership should, like any other form of property, be breached only through legal processes, such as a court order or to serve the enforcement of tax and other laws, or with the permission of the owner.

Why, then, do the financial institutions object to Speier's measure and employ legions of lobbyists to kill it each year? Because the personal data are valuable in the marketing of stocks, bonds, insurance policies and other financial products and services, or to charitable fund-raisers.

Famed bandit Willie Sutton, asked why he specialized in robbing banks, answered: "Because that's where the money is." By the same token, those who have financial products to sell or money to raise want to know who has the money to respond and, therefore, want access to the financial data of potential customers. Speier claims that financial institutions in California make about a half-billion dollars a year by selling their customers' financial information to others.

Currently, they can peddle the data unless customers object and "opt out." Speier generally wants to change the system to require customers to specifically give their permission ("opt in"), but the businesses involved don't want the hassle of asking them, or fear that too many would fail to cooperate.

Speier, a Hillsborough Democrat, has made a number of weakening amendments to her long-pending measure in hopes of winning legislative approval. But this week, for the umpteenth time, her opponents carried the day by persuading the Assembly Banking and Finance Committee to reject it. Gov. Gray Davis' belated endorsement of the measure apparently had very little influence on his fellow Democrats on the committee who killed the measure.

However, as Speier said afterward, "This is a bad day for consumers, but it's not the last day." She and her supporters in consumer groups are pushing an initiative that would go further than her bill in protecting personal financial information. The banks and insurance companies may regret not accepting her bill. If given the chance to protect themselves and their personal finances from financial peddlers, California voters will almost certainly "opt in."