In the Battle for Financial Privacy, Whose Voice will Count? 

By | August 9, 2023

In the lead-up to the debate about the Data Privacy Act of 2023, Financial Services Committee members received letters from consumer groups and finance trade associations, urging them to vote for or against the contentious legislation. 

The Data Privacy Act of 2023 garnered opposition from consumer advocacy groups and support from finance trade associations. The bill seeks to preempt state and municipal laws regulating the collection and disclosure of personal information by financial institutions, including credit reporting agencies and debt collection agencies. Consumer groups have expressed concern that the bill would deprive consumers of important rights under state law, including those governing credit reporting and data breach notification. In contrast, finance trade associations argue that the bill would strengthen consumer protections and provide a consistent regulatory framework for financial institutions.  

Finance trade associations and consumer groups often submit letters to Congress, hoping to influence policy decisions. But sending letters to Congress does not ensure that Congress listens. This is the topic of our recent paper, “Dear Congressmembers: Letters to Congress and the Shaping of (Financial) Legislation.” We study letters from finance trade associations and consumer groups concerning 821 proposed bills from 1999 to 2018 to see whether members of Congress appear receptive to the letters they receive. 

The letters explicitly express the positions of consumer groups and finance trade associations, usually in the subject or first paragraph. For example, consumer groups wrote: “While claiming to strengthen the Gramm-Leach-Bliley Act and increase consumer protections, the bill actually would result in fewer rights for consumers, because it would deprive them of important – and enforceable – rights under state law.” We code the letters as expressing “wishes” in support or opposition of a bill if they contain such text fragments expressing explicit positions in a bill. 

We document that the interests of consumer groups and finance trade associations are frequently at odds. While consumer groups tend to oppose proposed legislation, finance trade associations are more inclined to lend their support. In 23% of bills that both parties weighed in on, these two factions find themselves in direct opposition. It is interesting how lawmakers navigate such competing demands. 

Our analysis reveals that lawmakers tend to align their voting behavior with the positions espoused in letters from both consumer groups and trade associations. Nonetheless, members of Congress appear to be more receptive to the viewpoints expressed by consumer groups. This responsiveness is heightened when consumer groups and trade associations adopt opposing stances, a noteworthy finding given the marked divergence in financial resources between these two interest groups.  

However, the average effects mask significant variations in responsiveness among members of Congress and at different stages of the legislative process. For instance, lawmakers who receive campaign contributions from trade associations tend to be more attentive to the views espoused in trade association letters. Newly appointed members of the Financial Services Committee exhibit diminished sensitivity to consumer groups and heightened responsiveness to trade associations. One reason may be that members of the Financial Services Committee experience a notable surge in campaign contributions from finance trade associations following their appointment.  

Our research helps make sense of ongoing debates surrounding the Data Privacy Act. The Representative who introduced the privacy bill, Patrick McHenry, is a member of the Financial Service Committee. He also received over $2 million in campaign contributions from the financial sector in the previous election cycle. Our results suggest that the combination of campaign contributions and Financial Services Committee membership are useful predictors of whose voices Representative Patrick McHenry is listening to. 

While this is just one case study, our comprehensive analysis of legislative behavior among members of Congress spanning two decades suggests that newly appointed members of the Financial Services Committee are more inclined to introduce bills that align with the interests of finance trade associations.  

The First Amendment guarantees Americans the right to petition their government and elected representatives, allowing them to voice their ideas, hopes, and concerns. But as the Supreme Court in Minnesota Board for Community Colleges v. Knight (1984) pointed out,

[N]othing in the First Amendment or in this Court’s case law interpreting it suggests that the rights to speak, associate, and petition require government policymakers to listen or respond to individuals’ communications on public issues.”

We document for the first time that the lack of a requirement for policymakers to listen leaves the door open for monetary incentives to amplify some voices over others.  

Our findings highlight the need for greater transparency and accountability in the political system to ensure that lawmakers prioritize the needs of the public over well-funded interest groups. While the right to petition remains a vital tool for citizens to express their concerns and ideas, addressing the systemic issue of unequal access and conflicts of interest that can undermine the legislative process is essential. 


Renée Adams is a Professor of Finance at the Oxford Said Business School.  

Thomas Mosk is Lecturer at the Queen Mary University of London 

This post was adapted from her paper, “Dear Congress Member: Letters to Congress and the Shaping of (Financial) Legislation,” available on SSRN 

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