Safeguarding your Money: A Governmental Attempt

The Financial Modernization Act of 1999, also known as the “Gramm-Leach-Bliley Act” , was created to protect consumers’ personal information held by financial institutions. There are three principal parts to the privacy requirements: the Financial Privacy Rule, Safeguards Rule and Pretexting provisions. Many people today value their money and thus believe that their wealth is safeguarded within financial institutions such as banks, brokerage houses, pension plans, etc. However, the only assurance that a person really has regarding the security of their money, is the financial statement they receive each month. Remember, a financial statement coupled with your faith is the only assurance that the money you may need at any time and for any reason is always there for you. Under this legislation you cannot just go into the institution and withdraw your own $10,000.00 in cash without some kind of 3-5 day delay excuse from the institution, some kind of reporting to the government or19079540.thb.jpg other attempts to hinder your efforts. No longer can you redeem your deposits at will.

Perhaps the last time you checked your account, it was still your money for the taking. It is recommended that you be smart when it comes to safeguarding your money. Not only do you want to safeguard your money, but you should have the instant authority and privacy right to withdraw without hassle. However, financial institutions have a great lock on the wealth of many individuals, and so much so that it does not matter to them whether or not they promptly give you your money upon request of withdrawal or sell your personal information to solicitors such as credit card companies, other lending institutions or even brokerage houses. Upon a government request, they quickly and without question or remorse give all of your information over without safeguarding it.

The socalled signature card that you sign upon the opening of a new bank account at any local institution is a contract that allows them to provide much of the information they sell off or provide without your immediate knowledge. Read the back of the signature card one day, and if the language sounds confusing, read the rules and regulations, if you haven’t already. You will be quite surprised at what you may find in your reading. If you were in fact trying to take it out of a monetary fund or pension plan, it is automatically reported to the government, and most of you are reluctantly forced to pay a penalty for taking it out. If you decide to put it all back in the monetary fund/pension plan several months later, you will get taxed again on that same money when you may once again be in financial need.

Who really is the winner in this paper money game? Well, the government has made some small but progressive steps toward the protection of your financial wealth. Years have passed and abuses have continued without much monitoring. Now the government is under pressure to place many irresponsible institutions in check. Thus, the GLB Act gives authority to eight federal agencies and the states to administer and enforce the Financial Privacy Rule and the Safeguards Rule. Under the Federal Trade Commission’s jurisdiction, institutions which include non-bank companies that engage in a wide array of “financial activities” such as: lending; brokering or servicing any type of consumer loan; transferring or safeguarding money; preparing individual tax returns; providing financial advice or credit counseling; providing residential real estate settlement services; collecting consumer debts; and various other activities fall within the intended legislation. The Safeguards Rule requires financial institutions to have a security plan to protect the confidentiality and integrity of personal consumer information.

It only takes one mishap for a person to lose their information to a solicitor, an identity thief. Then there is Pretexting. Pretexting is the use of false pretenses, including fraudulent statements and impersonation, to obtain consumers’ personal financial information, such as bank balances. This law also prohibits the knowing solicitation of others to engage in pretexting. The FTC extensively participates in monitoring operations of different companies as well as individuals that allegedly practice pretexting and sell such personal financial information. By knowing this you can be armed in fighting any possible abuse you may encounter from financial institutions. All in all, it is a commendable attempt to protect the rights of the individuals. The government has legislated other promising laws to help individuals, but there still seems to be nothing that compares to storing your wealth in your own repository. This may be your home, or anywhere else you feel is safe other than a private institution required to gather and report your information. This is not to say that you should not have a bank account, but what is being said here is to keep the majority of your financial wealth in your own safe repository. I invest in gold and silver American coins. It is a commodity that does not require reporting when it is located in your own safe repository such as your home. Also, the value of those commodities among others will never amount to zero, unlike the possibility of your paper money in a bank. Do you trust the bank more than you trust yourself? It is up to you to make that sound and smart decision.

{ The author is a New York based legal scholar, financial professional, and a client of SDL}

 

 

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