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NEWS FROM THE LIBERTARIAN PARTY
2600 Virginia Avenue, NW, Suite 100
Washington DC 20037
World Wide Web: http://www.lp.org/
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For release: March 10, 1999
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For additional information:
George Getz, Press Secretary
Phone: (202) 333-0008 Ext. 222
E-Mail: 76214.3676@Compuserve.com
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Know Your Customer regulation
is wounded -- but is it dead?
WASHINGTON, DC -- A regulation that would have required banks
to spy on their customers for the federal government appears to have
been squashed -- for the time being, anyway -- thanks in large part to
the efforts of the Libertarian Party.
"We have won the first round of the battle against the Know
Your Customer regulation," said Steve Dasbach, the party's national
director. "But the fight against this dangerous proposal may not be
over yet."
On Monday, the head of the Federal Deposit Insurance
Corporation announced that "the public has spoken very loudly and
clearly." Chairwoman Donna Tanoue said she will urge the FDIC's
four-member board to drop the controversial rule at their next meeting
on March 23.
The Know Your Customer regulation would have required banks to
determine where customers get their money, monitor bank transactions,
and report any "unusual activity" to federal law enforcement agencies.
The FDIC backed away from the proposal after being hammered by
up to 253,000 e-mail messages, letters, and faxes during its public
comment period, which ended on March 8. Of those comments, 171,268
were generated by the Libertarian Party's DefendYourPrivacy.com
website.
Up and running since February 17, the site generated an
astonishing 8,563 signatures a day on an electronic petition against
the regulation -- or 67.7% of all the comments received by the FDIC.
"The success of our DefendYourPrivacy.com website shows that
the computer mouse is mightier than the musket, and that the World
Wide Web is the political organizing tool of the 21st Century," said
Dasbach. "It also shows that cybercitizens, when given information
about threats to their privacy, will mobilize to fight those threats
and make their voices heard."
The DefendYourPrivacy.com site explained the Know Your
Customer regulation; allowed voters to send e-mail comments directly
to the FDIC; and let people automatically notify others about the
site via e-mail, starting a "chain reaction" that picked up steam as
the days passed.
As the tidal wave of comments against Know Your Customer
mounted, politicians started deciding that they, too, opposed the
regulation.
Last week, by an 88-0 vote, the U.S. Senate expressed
"support" for a measure directing the FDIC to drop the proposed
rules. But a bill to give that measure the force of law was blocked
by Senate Democrats.
Also last week, the House Banking Committee adopted an
amendment to a financial services bill that would kill Know Your
Customer. However, a broader amendment filed by Congressman Ron Paul
(R-TX) that would have prohibited any federal agency from implementing
any similar bank spying rule was defeated.
Also, only two of the four agencies that originally sponsored
Know Your Customer have said the regulation should be scrapped. While
both the FDIC and the Comptroller of the Currency have spoken against
the regulation, neither the Office of Thrift Supervision nor the
Federal Reserve has taken a public position.
In addition, an FDIC spokesman had stated previously that the
agency might withdraw the regulation, but implement Know Your
Customer-style requirements as a "policy."
That's why it's too soon to authoritatively state that Know
Your Customer is DOA, said Dasbach.
"Know Your Customer is wounded, but it isn't dead yet," he
said. "Even if they decide to kill it -- which hasn't happened yet --
the same bureaucrats and politicians who first proposed this dangerous
regulation could quietly bring it back after the public outcry has
subsided."
That's why Libertarians will stay vigilant, said Dasbach --
and have a back-up plan in place to fight Know Your Customer if and
when it comes back.
"Depending on what is announced at the FDIC's March 23
meeting, we are prepared to mount a lobbying campaign in favor of HR
516, a comprehensive financial privacy bill sponsored by Congressman
Ron Paul," he said.
HR 516 would "reign in the creeping surveillance state" by
prohibiting the FDIC and other federal agencies from implementing Know
Your Customer, would repeal other federal banking regulations, and
would open up federal financial files to the public.
"Know Your Customer is a disease that threatens our freedom.
HR 516 is the cure," said Dasbach. "The LP has already thrown a
monkey-wrench into the FDIC's plan to impose its wacky bank spying
scheme. With HR 516, we have the opportunity to kill this invasion of
privacy permanently."
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