Prevention of Private Information Dissemination Act of 2017

Floor Speech

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Mr. KUSTOFF of Tennessee. Mr. Speaker, I rise today in support of my bill, H.R. 4294, the Prevention of Private Information Dissemination Act of 2017.

Mr. Speaker, this legislation will establish criminal penalties for the unauthorized disclosure of living will and stress test determinations and other individually identifiable information by Federal officials.

With recent data breaches and leaks of sensitive information, it is essential that we ensure that this information is safely guarded and that people are punished for their illicit actions.

Since the enactment of Dodd-Frank in 2010, bank holding and certain nonbank companies, designated as systemically important financial institutions, otherwise known as SIFIs, are required to submit annual reports to the Federal Reserve and the Federal Deposit Insurance Company, the FDIC.

The purpose of these reports is to outline the company's strategy for a potential bankruptcy in times of market stress. Through the living will and the stress test process, banks submit detailed financial reports about their businesses, such as assets, trade secrets, and other classified information to the Federal Reserve and to the FDIC.

Unfortunately, Mr. Speaker, the information has the potential to be leaked by employees and, unfortunately, in April of 2016, this did occur. In fact, on April 12, 2016, it was discovered that nonpublic confidential supervisory information related to the living will results was leaked to the press directly.

The Wall Street Journal article from that day cited ``people familiar with the matter'' indicated that the agencies planned to reject the revised living wills of at least half of the U.S. banks that resubmitted proposals before formal decisions were sent to the institutions.

In this instance, the leak was extremely harmful, as financial institutions were preparing their quarterly investor reports. As a result, regulators were forced to formally release their findings the next day. In addition, this private information has market-moving implications and can result in insider trading and illegal sharing of information.

Mr. Speaker, prior to Dodd-Frank, the FDIC did not have market-moving information on high-profile industries. Stress test requirements therefore meant that the FDIC had to create new policies and new procedures to help protect the information. According to the FDIC's Principal Deputy Inspector General in 2016, the agency is ``not there yet,'' and it may not be prepared to safeguard the information.

Sadly, between 2015 and 2016, the FDIC experienced many data breaches that involved employees leaving the company. One such incident occurred in 2015, in which a departing employee downloaded sensitive stress test data onto a thumb drive.

These leaks are deeply troubling and, overall, they are unacceptable. This information could be obtained by individuals to either invest or to divest in particular stocks, which, obviously, can be quite damaging to bank investors and to the capital markets.

The unauthorized disclosure of information that can significantly alter the stock market is an extremely punishable offense. By increasing penalties on employees of these agencies, it proves, frankly, that they are not above the law.

That is why I introduced this bill, to ensure that sensitive market information is properly protected and that people who improperly disclose nonpublic, confidential information are, in fact, punished. Mr. Speaker, ultimately, this is commonsense legislation that will help mitigate future leaks of sensitive information.

I do want to thank Chairman Hensarling and the entire Financial Services Committee for their continued hard work.

I urge my colleagues to support this extremely important piece of legislation.

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