Privacy Backers Hit in War Chest

*More campaign funds for those who killed bill

By Christian Berthelsen, Chronicle Staff Writer

Sacramento -- Banking and insurance interests gave more than $700,000 in campaign contributions in the last election to members of a state legislative committee that defeated a financial privacy protection bill, according to a review of campaign finance records by The Chronicle.

More than a third of that money, about $254,000, went to two assemblymen who are members of a moderate Democratic caucus with a history of opposing the measure.

The nine Assembly Banking and Finance Committee members who abstained or voted no in the June 17 hearing received a total of more than $667,000. The three members who voted in favor of it received $37,450 in total.

On average, legislators who abstained from voting or opposed the measure received $74,182 -- nearly six times the $12,500 received from financial interests by those who supported it.

The industry has steadfastly opposed increased financial privacy protections, and the bill's failure marked the fourth year in a row that some version of it has stalled in state government.

"This bill is a clear illustration of how moneyed special interests can thwart the public interest," said Jim Knox, executive director of California Common Cause, an advocacy group that supports taxpayer-financed campaigns.

"This is a bill that polls show is overwhelmingly popular with the public, that is identified as the top consumer protection bill in the Legislature, and yet cannot get out of the Legislature because of the stranglehold of the financial services industry."

Supporters of the measure, SB1 by state Sen. Jackie Speier, D-Hillsborough, say consumers should have a right to decide if, and how, information about them such as spending habits, bank balances and payment history is shared by their financial service providers with other divisions of the company or outside marketers.

The financial services industry says the bill would harm companies' ability to serve their own customers, increase their operating costs and pose practical problems when it comes to implementing the bill.


The measure now appears all but dead. In order to pass out of the Assembly banking committee, the bill would have to receive four votes from five moderate Democrats on the panel who have consistently opposed it.

Backers of the bill say they have given up hope that it will move forward, and are now focusing their resources on championing a state ballot initiative to put the issue before voters. Another hearing is scheduled for July 7.

Major donors to the campaigns were companies, employees, related political action committees and industry trade groups including insurers Farmers Insurance Group of Los Angeles and State Farm of Bloomington, Ill.; credit card companies including Providian, Household International of Prospect Heights, Ill. and Capital One of McLean, Va.; banks including Citigroup, Bank of America, JPMorgan Chase and Wells Fargo; and credit scoring companies such as TransUnion, Experian and First Data Corp.

"Farmers (Insurance) has a long history of full political participation in the democratic process, and we support people who support a healthy business climate in California," said Mary Flynn, a spokeswoman for the company.


The three recipients who received the most money from the financial industry were members of the group of moderate Democrats who either abstained from voting or voted against it. They include Juan Vargas, D-San Diego, who received $135,600; Ed Chavez, D-La Puente (Los Angeles County), who received $118,800; and Ronald Calderon, D-Montebello (Los Angeles County), who received $91,300.

Chavez and Vargas voted against a previous version of the bill on the Assembly floor last year; Calderon is a freshman, but his brother, Tom, an Assemblyman who has since been termed out, also voted against it. Chavez's contributions from the finance industry represented 22 percent of his total.

Chavez did not return two telephone calls seeking comment. When approached on the Assembly floor Friday afternoon, both he and Calderon walked out of the chambers. Vargas, when approached, said he would not discuss the issue with The Chronicle, saying the newspaper "has stepped over the line on this issue."

The three banking committee members who received the least amount of money from the industry were Assemblywoman Patricia Wiggins, D-Santa Rosa, the chairwoman of the committee, who received $13,100; Ellen Corbett, D-San Leandro, who received $9,500; and Cindy Montanez, D-San Fernando, who received $1,700. Wiggins, Corbett and Wilma Chan, D-Alameda, who received $14,850, all voted for the measure in the Assembly last year.

Of all the major corporate donors, only Household -- which has since been acquired by HSBC Holdings Plc of London -- consistently gave to members who voted in favor of the measure this year and last.


The pattern between campaign money and a politician's view on an issue did not always hold.

Montanez, for example, abstained from voting for the measure in the Assembly hearing, but received the smallest amount of contributions from financial interests out of all -- $1,700, with $1,100 coming from two different Wells Fargo entities.

Knox said his group's study found that the financial services industry was spreading campaign money throughout the Legislature, with only a slight majority of 60 percent going to its supporters.

But The Chronicle's findings show that 83 percent of the campaign money given to Assembly banking and committee members went to officials who take the industry's side.

"It's a pretty common dynamic to reward your supporters and keep them in line," Knox said. "The data demonstrates that the lines have really been drawn.

They're clearly upping the ante with the folks who are in their camp."


The members of the Assembly Banking and Finance Committee, how much money they received from the financial services industry and how they voted on SB1, a financial privacy protection bill:


Patricia Wiggins, D-Santa Rosa (chair) -- $13,100.

Wilma Chan, D-Alameda -- $14,850.

Ellen Corbett, D-San Leandro -- $9,500.


-- NOS

Russ Bogh, R-Cherry Valley (Riverside County) (vice chair) -- $62,433.95.

Ronald Calderon, D-Montebello (Los Angeles County) -- $91,298.78.

Guy Houston, R-Livermore -- $77,300.

Tony Strickland, R-Moorpark (Ventura County) -- $79,163.95.



Ed Chavez, D-La Puente (Los Angeles County) -- $118,800.

Lou Correa, D-Santa Ana -- $66,154.58.

Tim Leslie, R-Tahoe City -- $34,800.

Cindy Montanez, D-San Fernando -- $1,700.

Juan Vargas, D-San Diego -- $135,600.


In determining financial industry contributions, The Chronicle used all donations from readily identifiable entities with financial business, including banks, brokerages and mutual funds, insurance companies, credit card companies, financial software companies, mortgage-related businesses such as title companies and financial information companies such as credit-scorers, as well as their trade groups, individual employees and political action committees. The results do not include donations from nonfinancial opponents of the bill, such as retail associations or media concerns such as AOL Time Warner.

See the article on San Francisco Chronicle website

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)

   Become a Clean Money Member