Key Takeaways
- •House Financial Services members debated a proposal to modernize the Gramm-Leach-Bliley Act by establishing a preemptive national financial privacy standard and granting consumers new data deletion rights.
- •Nathan Taylor (Partner, Morrison & Foerster) testified that GLBA remains effective but should be updated with access and deletion rights to match evolving state-level privacy protections.
- •Rep. Hill (R, AR-2) and Taylor discussed the importance of "technological neutrality" to ensure financial privacy laws remain functional as new innovations like agentic AI emerge.
- •Rep. Waters (D, CA-43) and Democrats warned against weaponizing consumer data for immigration enforcement, while Rep. Barr (R, KY-6) and Republicans prioritized eliminating the "patchwork" of state regulations.
- •The committee aims to reconcile industry calls for regulatory certainty with advocate concerns that federal preemption might lower consumer protection floors established by states like California.
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Hearing Analysis
Overview
The House Financial Services Committee held a hearing on March 17, 2026, titled "Updating America’s Financial Privacy Framework for the 21st Century" to evaluate potential reforms to the Gramm-Leach-Bliley Act (GLBA). Chairman J. Hill (R, AR-2) opened the session by emphasizing that while the GLBA has been a cornerstone of financial privacy for over 25 years, the rise of a 50-state regulatory patchwork necessitates a uniform federal standard. The hearing focused on a discussion draft authored by Rep. Bill Huizenga (R, MI-4) that proposes adding consumer access and deletion rights to the GLBA while establishing strong federal preemption to streamline compliance for financial institutions and fintech firms.
Key Testimony
Witness testimony provided a range of perspectives on modernization. Nathan Taylor, a Partner at Morrison & Foerster, argued that while the GLBA has stood the test of time, it should be updated to include rights for consumers to access their data and for former customers to request data deletion. He stressed that federal preemption is essential to avoid an "inequitable result" where consumer rights vary by zip code. Clara Kim, Senior Vice President at the Bank Policy Institute (BPI), highlighted the unique role of banks, noting they must retain data for fraud prevention and anti-money laundering (AML) obligations. She cautioned that any new data minimization standards must not inadvertently curtail essential internal uses like risk management. Steve Boms, Executive Director of the Financial Data and Technology Association (FDATA), focused on the "open banking" ecosystem, advocating for a framework where consumers have explicit control over data sharing. He noted that many fintechs already operate under GLBA standards through service provider provisions.
Policy Proposals
Policy discussions centered on the tension between federal preemption and state-level innovation. Jordan Crenshaw, Senior Vice President at the U.S. Chamber of Commerce’s Technology Engagement Center (C-TEC), cited research from the Information Technology and Innovation Foundation (ITIF) suggesting a fragmented privacy landscape could cost the U.S. economy $1 trillion over a decade. He strongly opposed the inclusion of a private right of action (PRA), arguing it would lead to "abusive and exploitative litigation" that benefits trial lawyers rather than consumers. Conversely, Laura MacCleery, Senior Director for Policy and Advocacy at UnidosUS, argued against preemption, asserting that states like California and Colorado serve as "laboratories of democracy" that provide higher protections than the proposed federal floor.
Overview
The hearing featured sharp partisan disagreements regarding the role of federal agencies and the current administration’s data practices. Ranking Member Maxine Waters (D, CA-43) and other Democrats expressed alarm over reports that the Department of Government Efficiency (DOGE), led by Elon Musk, had gained "god tier" access to sensitive databases at the Consumer Financial Protection Bureau (CFPB) and the Social Security Administration (SSA). Rep. Waters introduced a resolution of inquiry to investigate how DOGE and individuals from companies like SpaceX and Tesla were accessing government payment systems. Democrats also criticized the administration for allegedly pressuring companies like Anthropic to provide surveillance technology to the Department of Defense (DOD) and using Internal Revenue Service (IRS) and Department of Homeland Security (DHS) data to target immigrant communities.
Technical discussions focused on the transition from "screen scraping" to Application Programming Interfaces (APIs). Rep. Bill Foster (D, IL-11) highlighted the security risks of screen scraping, describing it as a "nightmare" that requires handling plain-text passwords. Witnesses generally agreed on the benefits of APIs, though Steve Boms noted that smaller institutions often lack the resources to build them. The role of the Financial Data Exchange (FDX) in setting industry standards and the potential for the FINOS Foundation to provide open-source compliance stacks for small banks were also discussed.
Several organizations were identified throughout the hearing in specific contexts: - Consumer Financial Protection Bureau (CFPB): Discussed regarding its Rule 1033 on open banking, its role as a primary enforcer of financial privacy, and concerns over its budget being slashed by Congress. - Securities and Exchange Commission (SEC): Referenced regarding an Office of Inspector General (OIG) report that found its internal data protection controls to be ineffective. - Department of Government Efficiency (DOGE): Criticized by Democrats for allegedly improper access to sensitive consumer and taxpayer data. - U.S. Chamber of Commerce: Advocated for national uniformity and the "consensus privacy approach" adopted by 17 states. - Financial Data and Technology Association (FDATA): Represented the interests of fintechs and open banking platforms. - Internal Revenue Service (IRS) and Department of Homeland Security (DHS): Mentioned in the context of a federal judge's ruling that the IRS illegally shared taxpayer data with DHS for immigration enforcement. - Anthropic, SpaceX, and Tesla: Mentioned regarding their relationships with the administration and access to or refusal to provide sensitive technology/data. - Bank Policy Institute (BPI): Represented large banks' concerns regarding data retention for fraud and credit underwriting. - UnidosUS: Opposed federal preemption and raised concerns about "surveillance pricing" and financial exclusion of Latino communities. - Financial Data Exchange (FDX): Recognized as the industry-led group developing API standards for data portability.
Key Testimony
The hearing concluded with Chairman Hill requesting witnesses to provide further written testimony on the technical feasibility of banning screen scraping and the impact of data minimization on fraud detection. No specific deadlines for the Huizenga discussion draft were set, but the committee indicated continued coordination with the House Committee on Energy and Commerce to ensure cross-jurisdictional policy alignment.
Transcript
Committee on Financial Services will come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. Today's hearing is entitled Updating America's Financial Privacy Framework for the 21st Century. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. I now recognize myself for four minutes for an opening statement. Good morning. Today's hearing will examine the current state of consumer financial data policy and potential reforms to the Gramm-Leach-Bliley Act, or GLBA. I want to begin by emphasizing the importance of maintaining the technology-neutral framework of Gramm-Leach, which has readily adapted to innovation for over a quarter century and has the tools to continue to adapt as technology goes in directions that we cannot predict. We will also consider potential additions to the Gramm-Leach framework to give consumers greater control over their data while maintaining the smooth provision of financial services, to give financial institutions greater clarity about their obligations, and to promote competition and increase consumer choice. And as we consider these changes, we're working closely with our colleagues down the hall in the Energy and Commerce Committee to create a workable and comparable set of federal policies for consumer data while accounting for the nuances of the different types of firms, products, and services in our respective jurisdictions. As we consider additions to GLBA, we must strike a balance to achieve consumers' desire for greater control over their financial data on one hand, and on the other hand, their desire for financial services to work as seamlessly as possible and without having to wade through a sea of checkboxes and emails. As we consider additions like access rights, deletion rights, and data minimization standards, we must craft them in a manner that imparts greater control but without the unintended consequences that, for example, an unwitting deletion request could have on a consumer's smooth receipt of financial services. We must also recognize that the states have been running 26 years of experiments. With the results from these laboratories of democracy in hand, it's clear the time is now for a federal standard. Nationwide uniformity will promote competition by lowering barriers to entry created by the current state patchwork, which disincentivizes firms from entering new state markets and competing on price for the ultimate benefit of our consumers. Nationwide uniformity will also give consumers greater choice by making products currently only available in some states available to all. As we consider these and other changes to Gramm-Leach, we must above all be humble as the original authors who knew two key things. One, they could not predict what course technological innovation would take. And secondly, they took a cautious, considered approach that allowed for flexibility and innovation was the best path forward. I urge all of our members on both sides of the aisle in our work on this subject to use a scalpel, not a sledgehammer. And I really look forward to our panel of witnesses today. I yield back. I recognize the ranking member of the committee, Mrs. Waters, for four minutes for an opening statement.
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