CUNA Regulatory Comment Call


August 1, 2000

Study of Financial Privacy and Bankruptcy

EXECUTIVE SUMMARY

Comments on the study are due by September 8, 2000. Please submit your comments to CUNA by September 1, 2000. Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Assistant General Counsel Jeffrey Bloch at jbloch@cuna.com; or mail them to Mary or Jeff in c/o CUNA's Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005. You may also contact us if you would like a copy of the request for comment or you may access it on the Internet at the following address:http://www.usdoj.gov/ust/privacy/privacy-study.htm

BACKGROUND

A person who files for bankruptcy must provide detailed financial information as part of the schedules that are filed with the bankruptcy courts. This includes a list of the accounts with financial institutions that includes the account numbers and the balances, credit card account numbers, social security numbers, balances owed to creditors, income sources, list of assets, and a budget showing the debtor's expenses. By statute, this and all other information filed with the court are publicly available. However, in other non-bankruptcy contexts, such as banking and credit reporting, there are regulations and other safeguards designed to ensure the confidentiality of this information.

In the past, such access by the public has, as a practical matter, been quite limited. Obtaining this information required considerable time, effort, and sometimes money. However, the development of technology and Internet access raises the possibility that this sensitive information may be obtained easily by others who may use the information for fraudulent purposes.

Bankruptcy trustees have access to this public information and often receive other sensitive information from debtors, such as tax returns, additional information about assets and liabilities, an accounting of living expenses, payment schedules to creditors, and information about alleged wrongdoing. This information is not generally available to the public, but is needed to administer bankruptcy cases, and trustees are allowed to provide this information to creditors, attorneys, and others with a legitimate interest in the case. However, there are no well-defined limits on the trustee's authority to disclose this information to others or limits on the authority of these other parties to use, sell, or transfer this information.

DESCRIPTION OF THE REQUEST FOR COMMENT

On April 30, 2000, the President announced the "Clinton-Gore Plan to Enhance Consumers' Financial Privacy: Protecting Core Values in the Information Age." As part of this plan, the President directed that a study be conducted on how best to handle privacy issues for sensitive information in bankruptcy records. This specifically includes the review of the electronic availability of detailed bankruptcy records and the impact that this may have on privacy.

The Department of Justice, Department of Treasury, and the Office of Management and Budget are currently in the process of conducting this study of how the filing of a bankruptcy affects the privacy of consumer information that becomes part of the bankruptcy case. The study will consider how these privacy interests are affected by the public availability of such information, while considering the need for access to this information and the accountability in the bankruptcy system. The study will also consider how changes in business practices and technology may affect these privacy interests.

To assist in this study, these agencies are now requesting public comment on a number of issues. The issues that may be of concern to credit unions are reflected in the questions that follow this summary. The study is expected to be completed by December 31, 2000 and will specifically examine the following issues:

The request for comment also requests input about the effect that a business bankruptcy filing has on information that the business has collected. The agencies conducting the study believe that this merits attention and may examine this issue further after receiving comments. However, this is not part of the formal study because of pending enforcement actions and legislation.

QUESTIONS TO CONSIDER REGARDING THE REQUEST FOR COMMENT
(These Issues are Specifically Raised by the Agencies Conducting the Study.)

Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com