ATR Supports Sen. Lee’s Saving Privacy Act 

On September 25, 2024, Sen. Mike Lee (R-Utah) introduced the Saving Privacy Act. This bill creates a streamlined federal framework to protect consumer financial data in the U.S.  

The primary goal of the bill is to allow financial institutions to retain consumers’ financial records while simultaneously limiting the federal government’s ability to obtain consumers’ sensitive financial information. The bill aims to give consumers more control over their personally identifiable information (PII) without government intrusion.  

The bill starts by amending the Right to Financial Privacy Act of 1978 to clarify the government has no authority to access personal financial records of any customer from any financial institution unless they become disclosed through a properly obtained search warrant. The bill also repeals the Corporate Transparency Act (CTA), which requires small businesses to report PII to the Financial Crimes Enforcement Network (FinCEN). This information is collected in a large database controlled by the Treasury Department. The CTA was hurriedly passed through both chambers of Congress in 2021 in an omnibus legislative vehicle that was primarily meant to reauthorize the Department of Defense (National Defense Authorization Act).    

Title II of the bill generally removes exceptions in statute that allow the government to access consumer financial information without a warrant. It also prohibits federal agencies from using codified regulations as a justification for requesting financial information from consumers. The provisions clarify that the government may not access consumers’ financial records pursuant to restrictions in the Fourth Amendment to the U.S. Constitution.   

Title III of the bill eliminates the Consolidated Audit Trail (CAT). The CAT is a “comprehensive audit trail to enhance regulators’ ability to surveil the U.S. markets in an effective and efficient way.” In other words, this database allows the federal government to closely track stock trades in real time. This is an egregious intrusion into an investor’s right to privacy. The bill also prohibits any federal agency from reestablishing CAT or database similar to the CAT. However, the bill does not prohibit Congress from enacting legislation to allow an agency to establish the CAT. This provision is important because it preserves the separation of powers among the three branches of government. There is a stark difference between unelected bureaucrats at a federal agency arbitrarily establishing new stock tracking databases and elected representatives of Congress enacting legislation to do so.  

Title IV of the Saving Privacy Act directly prohibits the issuance of a central bank digital currency (CBDC). The bill prevents a CBDC from being issued both directly to consumers and to banks via the twelve Federal Reserve Banks. CBDCs could be used by the federal government to collect taxes, harass small businesses, and scrutinize consumers’ purchases of goods and services.  

Title V is nearly identical to the Regulations from the Executive in Need of Scrutiny (REINS) Act. The goal of this provision is to require congressional approval for any “major rules” that are drafted by federal financial agencies. A major rule is any agency rule that results in an annual effect on the U.S. economy of $100 million or more; “a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions;” an increase in “mandatory vaccinations,” or a “significant adverse” effect on different aspects of the U.S. economy. A major rule will take effect when Congress enacts a joint resolution of approval. Nonmajor rules, which are any rules other than a major rule, can be rejected by Congress via a joint resolution of disapproval. However, there are exemptions for certain nonmajor rules. Monetary policy decisions made by the Federal Reserve are also exempt from this title. 

The primary difference between this bill and the REINS Act is that this bill only applies to federal financial agencies, not all federal agencies within the executive branch. Agencies in the bill include the Federal Reserve, Federal Deposit Insurance Corporation, and the Securities and Exchange Commission, among others.   

The bill also requires a review of agency rules currently in effect, and the Government Accountability Office (GAO) is required to conduct a study to determine the number of rules in effect, major rules in effect, and the total economic cost “imposed by all such rules.”  

The final title of the bill strengthens criminal and civil penalties and opens other options for consumer relief in the event financial information is wrongfully disclosed. There are also “good-faith” protections for financial institutions that disclose certain customer financial information. 

Financial privacy is of paramount importance in the digital age. Lawmakers should support Sen. Lee’s efforts to further preserve financial privacy and prevent the federal government from easily accessing this information. Enacting this legislation will also protect consumers from other existential threats to financial privacy—such as tracking stock trading and electronic payment activity.  

This legislation is necessary and should be swiftly enacted.