Mr. GELLER. No. You're right on that.

Senator TSONGAS. It would be the general categories.

Mr. GELLER. You're right on that. It's just going to very succinctly give the reasons, and that is why we say it's inadequate today. It s quite inadequate. Just knowing a brief reason does not put you, the consumer, in a position where you can deal wholly, fairly, and effectively with the situation.

Senator TSONGAS. The difference is, so far we get the same letter, but we've got greater access to the information. The letter does not change.

Mr. GELLER. No. It need not.

Senator TSONGAS. The hope is that the letter will be enough so that people will be satisfied or write their Congressman or Senator. Mr. GELLER. But the difference is a very important difference. He will now be able to know fully what the information backing up that reason was, and he'll be able now to contest it.

Senator TSONGAS. Only if he pursues it.

Mr. GELLER. He has to pursue it. That is true.

Senator TSONGAS. I don't have a problem with that.

Mr. GELLER. But presently, he can be shunted from place to place, just to get the nature and substance of the information. He can have great difficulty, and the system really discourages any pursuit. Under the bills, if he's interested, he can very quickly within time limits get all the basic information.

We are sensitive to the burdens that even minimal legislative requirements can place on small businesses. Throughout the drafting process we consulted with other Federal agencies and with private sector groups to try to craft an appropriate, workable exemption for small businesses. Rather than establish arbitrary measures of size by which certain businesses would be excluded from coverage, title II names only the specific types of institutions that would be covered, most of which are financial institutions as defined in the Right to Financial Privacy Act of 1978. Retailers, very many of whom are small businesses, would be covered only if they issued their own credit cards.

Senator TSONGAS. Two things. One, you made some changes as a result of the ABA study. Are they now supportive? Mr. GELLER. Are they now what?

Senator TSONGAS. Supportive?

ABA NOT SUPPORTING LEGISLATION

Mr. GELLER. No. The ABA is not supporting this legislation. Mr. HOWARD. They have not made a public statement of which we are aware, but they certainly have not affirmatively come out. in support of it.

Senator TSONGAS. So what did you get in exchange for your modifications?

Mr. HOWARD. We didn't modify it in response to the study. Senator TSONGAS. Accordingly, we deleted that requirement in the bill.

Mr GELLER. We deleted that requirement because we did feel a necessity to cut down on too great costs being imposed. We are in an inflationary time. As you know, we have been enjoined by the

President to try not to add regulatory costs that contribute to inflation. We're trying to get hold of the future.

We would like to have gotten hold of the past, but if it has that high a cost, it wasn't worth it.

Mr. HOWARD. We were looking at it-

Senator TSONGAS. I'm not saying that the ABA study was correct that the requirement is excessive, I'm just fascinated-

Mr. HOWARD. It was not done as any part of a trade. We reached that conclusion independently of the Touche Ross study. We had drafts circulating. The study came out and said that what we had tentatively done in draft form, in fact, made sense from that standpoint.

But we didn't say, "Here's a study. If we get rid of these provisions, the banking industry will consent to support the bill."

Mr. GELLER. Although we welcome that support. [Laughter.] Senator TSONGAS. I'm sure you would. It reminds me of the crossover legislation where the chairman commended Senator Lugar and I on our substitute and put in the New York Times editorial lauding our substitute, then vote against it.

What percent of the industry would be exempt from your small business category exemption?

Mr. GELLER. A very large percentage in numbers, because most retailers don't issue their own credit cards, and therefore they would be exempt.

We will try to supply a figure. If you look at dollar volumes, we are picking up a very large percentage of the industry because of Sears and Montgomery Ward and other large retailers who issue credit cards.

Senator TSONGAS. Has anyone projected out the costs of the legislation to a Sears company?

Mr. GELLER. No. I would point out that some companies-Aetna, for example-are using this as a straight advertisement to customers. So some companies are already doing it.

I think they would probably have some notion of what the costs are, but I don't know what they are.

Senator TSONGAS. Could you argue that the cost of this is a oncethrough cost, that once having arrived at a different system, that costs are not any different than what you have now? It is the transition that is costly, but not the system?

Mr. GELLER. There will be minor costs throughout the process. Whenever there's an adverse decision, you will have to supply the information underlying the decision, possibly supply a copy. That cost will continue.

We have not, as I say, required any special mailing to existing accounts. We've eliminated that because of the enormous costs involved. We would notify people as they open new accounts.

There would be an initial cost in the notification. Creditors will have to devise a notification as to what their collection and disclosure processes are. That cost will be one that is, just as you say, initial.

The notification, however, in an adverse decision-the supplying of information will be a continuing one and not just an initial one. Senator TSONGAS. Are you aware of any movement in the industry to change their practice to lobbying against this legislation?

Mr. GELLER. There are some indications among some elements of the industry. As I said, some are already moving voluntarily. But I could not say that the industry as a whole has said, "We think this legislation is very much needed. It is extremely important that each individual have the right of being notified, of getting the basic information." I don't think anybody can come before you and say that the industry has obviated the need by voluntary practice. It has not.

Senator TSONGAS. Have you indicated to them that self-policing would have the same effect?

Mr. GELLER. We would certainly urge them-we would welcome them to take steps. We don't want them to wait for legislation. We think these rights should be accorded right now, and we would welcome that. The problem there is that some number, some percentage-some significant percentage of the industry may not followthrough.

We think it's a fundamental right of every individual to have this, and, therefore, even if you've got 80-percent compliance, which would be a very lovely figure, we would commend them and pat them on the head and say, "God bless you for it." We would still say we want the legislation for the other 20 percent.

Every individual should have this right. These are very fundamental rights, I think, as fundamental as the right of privacy, civil rights, or other rights.

Mr. HOWARD. And there are some provisions in the bills which cannot be granted voluntarily-the expectation of confidentiality provisions. A bank or a credit card issuer, does not have the ability voluntarily to place restrictions on itself. You have certain legal rights with respect to the individual whose records are being sought through private litigation by the Government or the like. So, there are some parts of it that simply cannot be done voluntarily.

ARGUMENTS AGAINST LEGISLATION

Senator TSONGAS. What would be the arguments against the bill by the industry? Let's say, the ABA.

Mr. GELLER. That it's unnecessary, too costly, just a few isolated abuses. I am just reciting what may be the nature of the arguments. We dispute them. We don't think it's too costly; we don't think we're talking about isolated abuses. We think the abuse, as I said last time, occurs every time someone doesn't get the information about why was this adverse credit decision made. But I believe those are the arguments that would be made.

Senator TSONGAS. Redtape?

Mr. GELLER. Yes, they will say, "Here is more and more Government regulation. The winds of deregulation are blowing. Why are you going against those currents? Why should Congress suddenly intervene in this process and impose greater regulation? You're deregulating trucking-trying to, anyway; deregulating airlines; deregulating communications. Suddenly, here, you are imposing Dore regulations."

Our answer to that is this: The administration is moving for deregulation in all these areas-but credit is an area where it is necessary for the Government to step in and redress the balance.

As Jim says, if you don't legislate that expectation of confidentiality, then it's not there. It's important for the Government to put it there.

Senator TSONGAS. You are bucking the trend.

Mr. GELLER. Yes, we are. But we think it comes from the same technological developments. Those technological developments, for example, in my field, make it clear that deregulation is possible, that now competition is possible through telecommunications. But those same developments in the computer area have done something different in the credit industry: Computers have made this the information society, which is desirable, but they've also taken the information out of the control of the individual. Once information gets in the system, because it's reported to credit bureaus and credit bureaus report it to everybody else, it is throughout the whole system.

I stress what I said at the beginning: Other countries are passing laws-we should do it whether they're doing it or not, but it seems to me that the United States, which has placed so much faith in individual rights, should be restoring those rights.

Senator TSONGAS. You know, 2 weeks ago the Senate passed the FTC bill.

Mr. GELLER. Yes; my own view is that that was overkill, to a very large extent.

Senator TSONGAS. What was overkill? The Commission, or the bill? [Laughter.]

Mr. GELLER. The bill was passed before the Commission even acted, and it would have been better policy to let the Commission act and then have Congress review it. Congress killed, for example, the children's television investigation before the Commission had even done anything.

Senator TSONGAS. That was the example I was going to raise. Obviously, digestible issues, like children's television, get defeated by something like 3 to 1 or 2 to 1. Why do you have any hope that something like this will pass?

Mr. GELLER. You know, I think this does command the support of both liberals and conservatives. They rally around this. Representative Goldwater has been a leader in this field, for example. I believe Senator Goldwater, his father, has also spoken on our behalf.

I think the reason again, is individual rights. This is restoring them. The rights we're talking about here are that individuals should know what records are being collected about them, should have access to them and see what they are, should know why an adverse decision was made and know the information on which it's based. It's very hard to quarrel with those rights. These are fundamental rights of fairness. I think the only thing you can quarrel about is cost, and we have minimized those costs.

Senator TSONGAS. Have you-are there hearings held on the House side?

Mr. GELLER. There have been hearings held, for example, on the medical records bill. We can give you the exact date that hearings will be held on other bills.

Senator TSONGAS. Is this Frank Annunzio's-which committee is

Mr. GELLER. Chairman Preyer.

Mr. HOWARD. Yes; Representative Preyer has the insurance title before him.

Mr. GELLER. And has moved it.

Mr. HOWARD. He has had hearings and is in the process of ongoing examination.

Senator TSONGAS. I am sorry. Can you repeat that?

Mr. HOWARD. Yes, sir. The insurance bill, on which we testified before you recently, is before Representative Preyer's subcommittee. The titles on which we are testifying today have been sent to Frank Annunzio's subcommittee of the House Banking Committee, and there are no hearing dates set yet in that subcommittee. Senator TSONGAS. Well, if you don't have a hearing date-what indications do you have-let me put it bluntly——

Laughter.]

Senator TSONGAS. You know, this is going to be perceived as a redtape issue. I happen to agree with you on the merits of it, although we may take issue on some of the details. But here you have an administration that is up for reelection. The Congress is coming up. Would people be all that terribly upset if this were put off until the beginning of next year?

Mr. GELLER. I cite again that poll that shows that this issue has support, and the editorials. I think that this legislation would be well received by the voters. Therefore, while it's an election year, I think this would sit very well. But we're not advocating it on that basis We're advocating it because we think it is right, and that's why we keep pushing for it.

But even in an election year, this legislation, I think, would be popular with the electorate. It may end up being put off, but we Want to do our best to get it through. We think this is something that's needed, and it's needed as soon as possible.

We have heard you on the Government-access issue. It was very helpful, what you said last time. We have to make a certain date. We will make that date on the Government access amendments. What we are saying to you-and I put it as simply as possible-is that we want this legislation as soon as possible, and if it's put off, we don't want anybody to say it was put off because we failed to push as hard as we could or to deliver whatever the administration had to deliver.

Senator TSONGAS. How many cosponsors do you have for the bill? Mr. GELLER. In the Senate?

Senator TSONGAS. Yes.

Mr GELLER. I believe that Senator Proxmire introduced it. Mr. HOWARD. In the House, I believe, there are 10 cosponsors. Senator TSONGAS. Maybe you ought to send that poll around. Mr. GELLER. You have a point there. We ought to be doing more work, and we will continue to work hard for it.

The bills address fundamental rights. And I say that like a broken record but I don't know any other way to say it.

Senator TSONGAS. You know, you're convincing the already-connced I am just trying to suggest to you-

Mr. GELLER. You're saying that perhaps we ought to be working harder. And that's a valid point.