A LITTLE SECRET: CORPORATE AMERICA IS ON TO YOURS

The letters have mounted for weeks. More than 100,000 and counting. All but
a handful saying essentially the same thing: Uncle Sam, out of my bank
account.

They're writing to complain about the Federal Reserve Board's proposed
"Know Your Customer" rule. The proposal-- which now seems doomed to
failure-- would require banks to serve as government snitches to report any
out-of-character activity to banking regulators.

What started as an effort to stop money laundering and catch drug kingpins
is now under full-scale attack. Most people see the plan as a nearly
fascist affront that could have bankers filing triplicate forms every time
a granny gives a generous birthday present.

Phyllis Schlafly, chief of the right-wing Eagle Forum, is against it. So
are the card carrying, free speech zealots known as the American Civil
Liberties Union.

The proposal is so misguided and overreaching that it's going to be killed
shortly after the Fed stops taking public comment on this stink bomb March
8. But before we bid good riddance to Know Your Customer, we should thank
it for what it has done.

It has exposed a growing and very rational fear among people from all over
the political spectrum that strangers know far more about us than they should.

Heck, anything that gets Phyllis Schlafly and the ACLU singing from the
same protest hymnal practically deserves the Nobel Peace Prize.

The Know Your Customer rule scares people because the government was
getting nosy about the way we bank. But the Fed's Big Brother proposal was
abacus stuff compared to what big business has going.

It's very Patrick Henry to shout out about our right to not trust big
government. But there's no reason to trust big business more.

What's worse--having government gumshoes trawl through our bank records or
letting phone slammers and telemarketers look at everything from our
catalog purchases to our grocery lists?

That's a trick question, of course. Both intrusions are really bad.

The privacy attacks are everywhere.

Intel designed its new Pentium III so that the chip would tell any
e-retailer or Web site the identity of the computer on the other end of the
modem. Many banks now fingerprint people when cashing checks. An Internet
company offers free PCs in exchange for personal data. Talk about taking
candy from strangers.

Companies invest millions in building huge capabilities in an area called
data mining. They boast about "drilling down" through the data, into stuff
we wouldn't share with our siblings, much less strangers in a telemarketing
cubicle.

They paw through our credit card data, our phone records, our ZIP codes and
work addresses. They know our incomes, our borrowing habits, our family
sizes and career histories.

Then they manipulate it for their uses. If we just bought a house, they try
to sell us furniture. If we had a baby, they peddle diapers. When our
parents die, they shill for mutual funds.

If it sounds almost paranoid, well, that's too bad. This is a case where
paranoids do have enemies. Without our permission or knowledge, we're
profiled, databased and demographed to the last details of our private
little lives.

That's why the Fed's ill-fated Know Your Customer rule has come along at
such an opportune time. It's piqued our interest in the privacy problem
just as Congress is beginning to find the political will to do something
about it.

"The law is completely permissive on the commercial use of information,"
warns Edmund Mierzwinski, a Public Interest Research Group privacy rights
activist. "Know Your Customer demonstrates that maybe there is a chance
that you can turn the tide on privacy."

Proposals floating in Congress to limit the way banks use our private
information do not go far enough. It's fine to start with the banks, but we
quickly should focus on e-commerce, on telephone companies, on
retailers--in short, on all forms of commercial activity.

If we don't, bank snitches reporting on granny's big birthday gifts will be
the least of our problems.