WASHINGTON — When Rep. Carolyn Maloney talks about the balancing act between tighter consumer protection and the need to relieve financial institutions of overreaching regulation, nowhere is the tension clearer than in the area of data security.
She supports a federal standard to enhance security safeguards at banks, but wants to allow consumers to block access to their credit files and grant state attorneys general the right to enforce the new standards.
"Data security and identity theft are really top concerns of everybody," she said. "Everyone's talking about how their identity has been stolen. That really shouldn't happen."
The New York Democrat's views are likely to take on more significance this week, when she is expected to be named chair of the House Financial Services financial institutions subcommittee. In an interview last month, Rep. Maloney said her views on financial services legislation and regulation were shaped by the aftermath of the savings and loan crisis.
"When I first came to Congress" in 1992 and joined what was then the House Banking Committee "one of the first things I voted on practically was the bailout of the thrift savings institutions, and it really had a big impact on me," she said.
She said her chief priorities for the subcommittee are data security, regulatory relief, and creating a level playing field for banks and credit unions.
During debate on data security in Financial Services last year Rep. Maloney sponsored legislation that would let all consumers have the right to freeze access to their credit file.
Republicans and the financial services industry opposed the standard and the committee's bill included a provision, which would only have allowed victims of ID theft to freeze their credit files.
But Rep. Maloney said she still believes all consumers should have that right, which is provided in some form in 26 states.
"It's a consumer's identity. I feel they should be able to protect their own account and make determinations on it," she said.
Despite her new chairmanship, she may face an uphill battle on the provision. Rep. Barney Frank, the incoming House Financial Services chairman, has signaled he plans to leave a credit freeze up to the states.
But the Massachusetts Democrat and Rep. Maloney are in synch when it comes to letting state attorneys general enforce new standards for data security. Last year both lawmakers supported an amendment in a Financial Services bill that would have allowed state officials to take action against a bank. The bill - which conflicted with rival legislation from the Energy and Commerce Committee - was not taken up by the full House.
Rep. Maloney said the issue remains important to her.
"Why in the world would you take away someone who is working to help people? Why would you silence them?" she asked. "One of the great strengths of the federal system is that you have different people working on different levels to solve a problem."
She calls her proposal, which she still supports, the "Spitzer Amendment," in recognition of Eliot Spitzer, who, as the New York attorney general, asked the courts to overturn the Office of the Comptroller of the Currency's preemption of state consumer protection laws. (Mr. Spitzer was sworn in this week as New York's governor.)
Rep. Maloney and Rep. Luis Gutierrez, the Illinois Democrat who is expected to chair the monetary policy subcommittee, have cosponsored legislation that would nullify the OCC's preemption.
"If you move the regulations to the federal level, you have to make sure that the protections for consumers that were there at the state and local level continue. … We will certainly be looking at that," Rep. Maloney said.
But she also said she is prepared to listen to those who disagree.
"We are going to have hearings. … I think I have an open mind, and I'll listen to all sides and take a balanced approach. That is the purpose of having a subcommittee: to listen," she said.
Creating a level playing field for all depository institutions is another of Rep. Maloney's goals.
"I'm not only focused on a priority of safety and soundness of our financial institutions, but also a level playing field for banks and credit unions," she said. "That helps everyone. That helps the efficiency of the system, competition, and inspires innovation."
She also said she plans to push for legislation she cosponsored with Rep. Spencer Bachus, the committee's ranking Republican, that would let banks skip filing currency transaction reports for seasoned business customers. The financial services industry strongly supports the bill, but it stalled in the Senate last year.
The industry also is pushing for a bill coauthored by Rep. Frank that would prevent commercial companies from owning an ILC. Rep. Maloney said she supports that bill, as well as Rep. Frank's drive for legislation to stop predatory lending.
With a district that includes Manhattan and Queens, Rep. Maloney said, she has sought to "maintain the preeminence of New York City as the world's financial center," since she was elected to Congress in 1992.
Originally from Greensboro, N.C., Rep. Maloney taught eighth grade English-as-a-second-language and math for a year in New York before being hired to lobby for the New York City Board of Education. She held senior staff positions at the New York Legislature before spending 10 years on the New York City Council.
She was part of the effort to enact recommendations of the 9/11 Commission, and she has sponsored legislation to cover the health problems of Ground Zero rescue workers.
Though the issue is not in her subcommittee's jurisdiction, Rep. Maloney said she is hoping to get the full panel to reauthorize the Terrorism Risk Insurance Act.
Congress established the program in 2002 as a temporary response to the Sept. 11 attacks, with the expectation that the private sector eventually would cover such risk on its own. The program is scheduled to expire at yearend, and the insurance industry, Congress, and the Bush administration continue to debate the appropriate level of responsibility for the government and the private sector.
The financial services industry has expressed concern that in the event of another attack, instability in the insurance industry could leave lenders at a higher risk of default on loans.
Reauthorizing the act "has got to be an absolute priority of mine," Rep. Maloney said. "It's fundamental to the district that I represent.
"My constituents are telling me that the only insurance they can get is sort of a conditional insurance. … You get it through 2007, and if TRIA is not reauthorized, then you won't get the insurance coverage," she said.
