Legislators Reject Plan to Fortify
                   Consumer-Privacy Protections

                   By MICHAEL SCHROEDER
                   Staff Reporter of THE WALL STREET JOURNAL

                   WASHINGTON -- Putting the finishing touches on legislation to overhaul
                   financial-services regulation, lawmakers rejected a plan to significantly beef
                   up consumer privacy protections.

                   House and Senate conferees agreed to take up the privacy issue again
                   Monday in an effort to wrap up the compromise bill, which likely will be
                   sent to the full House and Senate for final approval later this month. While
                   the lawmakers have resolved several key issues, the White House is still
                   threatening to veto the measure if it fails to satisfy concerns about
                   consumer protections and maintain bank-lending requirements to low- and
                   middle-income neighborhoods.

                   As the legislation has made its way through Congress, a bipartisan coalition
                   led by Republican Sen. Richard Shelby of Alabama has pushed for
                   stronger safeguards for consumers' financial information. Mr. Shelby's
                   proposal, which was voted down on Friday, would have required financial
                   firms to obtain customers' permission before sharing information with both
                   affiliated and outside firms.

                   "That's what the American people want," Mr. Shelby said, pointing to polls
                   showing that more than 90% of U.S. consumers want the right to block
                   selling or sharing of their personal information. "The privacy issue is not
                   going away," he said.

                   As it currently stands, the overhaul legislation would allow financial
                   institutions to share private consumer information with affiliates, which
                   could include securities, insurance and banking operations. Institutions
                   would be required to disclose privacy protection policies to customers.
                   Customers could then tell financial institutions they don't want their
                   personal information given to companies outside the institution. Smaller
                   institutions would have more leeway in sharing information.

                   But the privacy issue could derail the long drawn-out reform effort. After
                   trying for more than two decades, the House and Senate earlier this year
                   passed bills that would eliminate many of the Depression-era barriers
                   separating banks, brokerage firms and insurers. The conference committee
                   has been negotiating to iron out differences in the two bills. Banks, insurers
                   and securities firms have made it clear they would try to kill any bill that
                   prevents affiliates from sharing customer information.

                   Industry lobbyists have said that such cross-selling is a primary purpose of
                   merging firms into one-stop financial operations. They have an important
                   ally in Senate Banking Chairman Phil Gramm of Texas, who defends the
                   current privacy language. "We'd kill the information age before it begins,"
                   he said.

                   On the other side, a diverse group of critics including consumer activist
                   Ralph Nader, conservative Phyllis Schlafly, AARP, and a number of
                   conservative Republicans and liberal Democrats in the House and Senate,
                   have joined together to denounce the legislation's privacy provisions as
                   inadequate.

                   Treasury Secretary Lawrence Summers has warned that the legislation will
                   be vetoed unless more safeguards are adopted.

                   Another obstacle for Democrats and consumer groups is a
                   GOP-sponsored provision that weakens the 1977 Community
                   Reinvestment Act. The CRA requires banks to make loans in low-income
                   and minority neighborhoods. Mr. Gramm agreed to meet with Rev. Jesse
                   Jackson to discuss the CRA issue and to jointly tour communities that
                   benefited from lending requirements.