CUNA Comment Letter

Re: Docket No. R-1058, Regulation P - Proposed Privacy Rule


March 31, 2000

Ms. Jennifer J. Johnson
Board of Governors of the
Federal Reserve System
20th & C Streets, NW
Washington, DC 20551

Dear Ms. Johnson:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the Federal Reserve Board's (Fed's) proposed privacy rule. CUNA represents more than 90 percent of our nation's 11,000 state and federal credit unions.

Under the Gramm-Leach-Bliley Act (Act), several federal regulators are required to issue comparable rules regarding the privacy of financial information. The National Credit Union Administration is required to issue rules for federally insured credit unions. The privacy rules issued by the Federal Trade Commission (FTC) will apply to credit unions that are not federally insured. The rules issued by the FTC and the Securities and Exchange Commission will apply to credit unions service organizations (CUSOs), which are limited partnerships, corporations, or limited liability companies where a credit union has made an investment and/or loan. CUSOs provide services that primarily serve credit unions or members of affiliated credit unions.

There are a couple of issues with regard to the privacy rules that we would like to bring to the Fed's attention. The first concerns the definition of "financial institution" and "financial products or services." The proposed rules issued by the federal regulators refer the reader to Section 4(k) of the Bank Holding Company Act. This will be confusing for credit unions and CUSOs because Section 4(k) was added by the Act. Credit unions are not as impacted by the Act as other financial institutions and will not be very familiar with Section 4(k). Because these definitions in Section 4(k) will require constant interpretations by the Fed, it is important that there be a mechanism where these interpretations can be communicated regularly to credit unions in an easily understood format.

The other issue concerns the drafting of the initial, annual, and opt out notices. We ask that the Fed take the lead in developing model language or sample disclosures. These models or sample disclosures will help credit unions in their efforts to develop the notices as intended by Congress and the regulators. These models or samples should also mitigate litigation that may result from those who may challenge the sufficiency of the privacy notices.

Thank you for the opportunity to comment on the Fed's proposed privacy rule. If you or other Board staff have questions about our comments, please give me a call at (202) 218-7795.


Jeffrey Bloch
Assistant General Counsel
Credit Union National Association