Sen. Andrea Nuciforo says he favors strengthening consumer privacy protections.

The senator enters his chambers nearly breathless, having hurried back from an event at South Station to his comfortable Beacon Hill offices in time for a scheduled interview. But managing a hectic schedule is probably one of the easier balancing acts facing Andrea Nuciforo Jr. His task as Senate chairman of the Joint Committee on Banks and Banking – protecting the rights of the consumer while ensuring that the banking industry thrives – is unquestionably more difficult.

But for the most part, both charges can be looked after by ensuring state-chartered banks are subject to the same laws as those holding a national charter, according to Nuciforo, a Democrat from Pittsfield.

Several bills sent to the committee for this legislative session involve some element of national vs. local, including a portion of Nuciforo’s Banks and Banking bill.

“I have been concerned, actually, the last couple of years, about what I viewed as unnecessary restrictions on branching for community banks,” said Nuciforo, speaking about a portion of his bill.

“The federal banks, those that have a national charter, have broad authority when it comes to [branching]. And I think that our community banks ought to have the same power.”

Currently, if a bank wants to move its main office or create a branch, it needs to ask the commissioner of the Division of Banks for permission, schedule a hearing and wait for the expiration of the public comment period.

“I think if you’re a bank and you want to move your main office, you ought to be able to do that. My draft says that upon 60 days’ notice, you can go ahead and move your bank,” Nuciforo said.

Similarly, the draft grants more latitude for banks to establish branches. If the bankers think the branch would serve the community and it would make good business sense to locate there, they should be able to, said Nuciforo, “absent an affirmative finding from the commissioner that the public convenience and advantage would be [negatively affected]. So we’re flipping the burden there.”

But consumer privacy also concerns Nuciforo. While privacy has become a buzzword, a bill concerning opt-in vs. opt-out provisions for consumers is likely to be the most contentious the committee will deal with this year, he said. The bill was sponsored by Rep. William M. Straus, D-Mattapoisett, and Sen. Steven A. Tolman, D-Brighton.

“Under federal law, if you are in the financial services business, you can use and market and exchange your customer information absent an affirmative opt-out by the customer,” said Nuciforo. Indeed, the privacy section of the federal Gramm-Leach-Bliley Financial Modernization Act gives banks until July 1 to comply with new privacy regulations by mailing notifications to customers that they have the right to opt out of that cross-sharing of information. However, many consumer groups have advocated all sharing of information should be considered off limits unless the customer opts in.

“The Tolman-Straus bill flips that [opt-out] rule on its head,” Nuciforo said.

In the last five years there has been a rise in the number of one-stop shopping financial services companies, which has resulted in greater efficiencies within the system. Nuciforo explained the argument against the opt-in provision this way: “To pass a bill that says, here in Massachusetts, there can be no cross-use of that information between affiliates sort of defeats the purpose of this whole idea of making financial services institutions more efficient.

“That’s the argument we’re hearing federally. I take a very dim view [of that stance]. Personally, I would like to increase the protection of consumers when it comes to the use of their personal information. I think that’s fair. But I also want on the books in Massachusetts something we can administer.”

One problem Nuciforo foresees is that federally chartered institutions could claim they are not subject to Massachusetts law because a consumer applied online for a service and not in a commonwealth location. “So this becomes a very dicey equation,” he said.

“I also want to make sure that we adequately and narrowly define the term affiliate,” added Nuciforo, a definition necessary in determining how and where banks share customer information. Ensuring the language isn’t too exclusive is also a challenge. “For example, if I walk into City Savings Bank in Pittsfield they should, I think, be able to send me something in the mail that says, ‘We have a life insurance license and we’d like to send you a flier telling you about the life insurance for you and your family.’ That doesn’t strike me as intrusive,” he said.

Nuciforo said it’s hard to make predictions right now about how the bill will fare. It was submitted during the last legislative session, but the committee didn’t have a chance to deal with it.

“I expect that this year we’re going to hear from the industry. We’re going to hear from consumer groups. This is sort of a national fad. I know there have been a lot of bills like this proposed throughout the country,” he said.

‘Vibrant’ System
The bill with the potential to have the most impact on the Massachusetts banking industry is Nuciforo’s own, Senate 10, an Act Relative to Banks and Banking.

“It’s a rather comprehensive approach to reforming certain of the banking laws in Massachusetts. It’s exhaustive,” he said. Under the proposed bill, Section 167E of Massachusetts General Law dealing with mortgages would be repealed in favor of a more “workable” law. Currently, the law has more than a dozen different sections concerning very specific mortgage lending powers. The new law would do away with those.

“[The new law] provides that a bank may make a mortgage loan, period. After that, what it says is a bank may make an adjustable rate mortgage loan subject to certain regulations set forth by the commissioner. Then there are safety and soundness criteria and capitalization criteria that every bank must satisfy in order to be an approved mortgage lender,” said Nuciforo. The only “catch,” he added, is that every loan must be eligible for sale on the secondary market.

The bill also proposes changes to the investment power of banks to make it a more “level playing field.” The bill will grant banks “other powers necessary to conduct a business financial in nature.”

“In addition to the very discrete functions that banks can already perform, such as opening savings accounts, they can do other things that are financial in nature that are ancillary to the business of banking. If you want to be in the payroll business [for example]. Federal banks have this; they got this in 1999 with Gramm-Leach-Bliley. I think their state counterparts ought to have that power as well.”

Ensuring that state banks have all the powers that federal banks do will result in a “vibrant state banking system,” which will also benefit consumers, he said.

This year, Nuciforo will be co-chairing the committee with a new partner, Rep. John F. Quinn, D-Dartmouth. Quinn said he’s looking forward to working with Nuciforo and is working on becoming more intimately familiar with the issues in front of the committee. Committee assignments came out rather late this year, in February. Quinn shares Nuciforo’s view on the most noteworthy legislation before the committee.

“This whole issue of privacy and the sharing of information, in particular with banks and financial services, that’s a hot-button issue,” said Quinn.

“Another issue is [Nuciforo’s bill which is] a comprehensive rewrite of the banking chapter to get it more consistent with federal law,” said Quinn. In addition, Quinn thinks that predatory and subprime lending will continue to be an area of concern.

Working with the new House chairman of the committee will be “easy,” said Nuciforo. “He’s smart, he’s sensible, he’s got good values and he’s interested in protecting consumers,” he said. “I anticipate a great working relationship with Rep. Quinn.”

Quinn replaced Rep. William G. Greene Jr., D-Billerica, as committee co-chairman.