May 4, 1999
 
 
 

                   Clinton Proposes to Boost Protections
                   Against Aggressive Bank Promotions

                   By JACOB M. SCHLESINGER
                   Staff Reporter of THE WALL STREET JOURNAL

                   WASHINGTON -- President Clinton is scheduled to announce Tuesday
                   a series of proposals designed to strengthen consumer protections against
                   aggressive bank promotions and better protect the privacy of
                   personal-financial information.

                   The package of legislative proposals and executive orders is aimed at
                   "updating our consumer-protection laws and practices to adapt to a
                   changing marketplace," says an early draft of an eight-page memo outlining
                   the package. While "many consumers already benefit" from the ongoing
                   "revolution in technology and increased competition in financial services,"
                   the memo says, "new products have brought new risks and new
                   opportunities for predatory practices."

                   The White House initiative comes as Congress weighs two major bills to
                   update regulation of the financial-services industry: a comprehensive
                   package to repeal Depression-era banking rules, and a bill that would
                   make it tougher for consumers to win debt relief through the Bankruptcy
                   Code. Some Democrats have attacked both measures for weakening
                   consumer rights.

                   Some of the measures to be endorsed by Mr. Clinton are incorporated in
                   the pending legislation; others are expected to be proposed soon by
                   congressional Democrats as amendments to those bills. Some of Mr.
                   Clinton's proposals have been put forward by regulatory agencies.

                   While the administration already has endorsed many of the elements to be
                   unveiled Tuesday, the announcement is the president's first comprehensive
                   statement on consumer protections in the rapidly evolving financial-services
                   world, and is aimed at easing Democratic worries. The package includes
                   many proposals that the banking industry bitterly opposes, particularly
                   requirements for greater disclosure of financial-product information.

                   Specifically, Mr. Clinton is expected to endorse measures that would force
                   credit-card issuers to explain prominently the limits of their "teaser" interest
                   rates that lure customers with low upfront rates that rise sharply once the
                   customer has used the card. Banks also would have to reveal more clearly
                   automated-teller-machine surcharges, as well as the penalties that
                   consumers could face for taking out big home-equity loans greater than the
                   value of their house.

                   The White House package also will back a prohibition on the unsolicited
                   mailing of "loan checks" sent by credit-card issuers to customers, as well
                   as the "coercive" sale of insurance products with what the memo calls
                   "dubious ... value," such as credit-life-insurance policies that guarantee full
                   repayment of a mortgage after a borrower's death.

                   To enhance privacy, the administration will endorse measures that would
                   expand a consumer's right to block a lender from selling information on
                   purchases with other companies.

                   Mr. Clinton also is expected to endorse new measures to "expand access
                   to financial services" to lower-income families, by subsidizing
                   electronic-bank-account fees for people receiving federal benefits. He also
                   will call for new programs to "improve consumer-financial education."