Page 19 - Information and American Democracy Technology in the Evolution of Political Power

P1: FpQ/IPH/GYQ
17:40
August 14, 2002
CY101-Bimber
CY101-01
0 521 80067 6
Information and Political Change
undertake the kind of political advocacy that traditionally has been the
province of organizations with far greater resources and a more central
position in the political system. A good example comes from very early in
the year, when the Federal Deposit Insurance Corporation (FDIC) and
other agencies proposed new regulations under the friendly euphemism
“Know Your Customer.” The Know Your Customer rules included re-
quirements that banks report certain customer financial transactions to
the government in order to assist authorities with the identification of
money laundering and other illegal activities.
The FDIC, which insures private deposits in banks and provides other
regulatory functions in the financial sector, is typically not the source of
controversy or high-profile political conflict. The agency’s activities fall
into one of those corners of public policy where little citizen attention
illuminates details of the relationship between an industry and its regu-
lators. When the FDIC published its proposed rules late in 1998 with the
agreement of the banking industry and Congress, and in coordination
with allied agencies – the Office of Thrift Supervision, the Office of the
Comptroller of the Currency, and the Federal Reserve –“Know Your
Customer” seemed a routine change in banking regulations.
Yet by February of 1999, just two months after the agency’s Notice
of Proposed Rulemaking formally initiated the public phase of regula-
tory proceedings, everything about the politics of Know Your Customer
had changed. Vehement public objections poured into the agency at an
unprecedented rate, complaining about threats to privacy and govern-
ment intrusion into citizen affairs. Congressional support dried up as
legislators backed away, and the banking industry itself announced that
it, too, opposed the rule. By early March, when the comment period
ended, the FDIC had accumulated about 250,000 public comments, all
but a hundred or so opposed. In the face of strident public opposition
and the about-face by other political actors, the agency had found itself
politically isolated. Drawn up short by the magnitude and vehemence
of the objections, the FDIC along with its sister agencies withdrew the
regulations and issued public statements bordering on contrition.
What lay behind this unexpected collective action on behalf of finan-
cial privacy and the remarkable back-tracking by an agency? A good deal
of social science research suggests that we should find a powerful organi-
zation or coalition of organizations behind such a large effort. Political
scientist Jack Walker has described the practical requirements of citizen-
based policy advocacy in the following way: “Political mobilization is
seldom spontaneous. Before any large element of the population can

2