Former congressman Bob Barr of Georgia spoke out recently about the U.S. government’s overreaction to terrorism.

Congressman Barr, who is known as an outspoken defender of the Bill of Rights and constitutional liberties, commented about the London bombings and the death of an innocent man who was mistaken for a terrorist. He noted that while, so far, such a tragedy has not occurred in the U.S., "our government continues to overreact to terrorist incidents, real and perceived, in ways that threaten to erase our liberties if not our lives."

He also touched upon a subject often expressed here, and that is financial privacy.

Repeating our sentiments, Barr noted: "It was not so many years ago that Americans could open a bank account and rest assured its contents would be free from prying government eyes unless federal agents could
establish to the satisfaction of a federal judge that the bank customer had violated the law. While the Internal Revenue Service was exempted from this prohibition on routine disclosure of a law-abiding citizen’s financial records, even that agency was severely limited in how it could use the tax related data and with whom it could share the information. In other words, as a man's home was his castle, so too his finances were his secret. No more."

Under the USA PATRIOT Act, versions of which were recently extended by both houses of Congress, and the ease with which "sneak and peek" warrants may now be issued to the government, a man's home is no longer his castle: it is now the government's playground. And, thanks to the PATRIOT Act, individual bank accounts are now being routinely analyzed and reported to government agencies for little or no reason whatsoever.

Barr also noted the futility of the unnecessary bureaucratic paperwork: Banks are now under increasing pressure to file more and more Suspicious Activity Reports (SARs) with federal agencies at the current rate of 800,000 per year (which is nearly triple the rate of three years ago). Until quite recently SARs were limited to instances in which unusual banking activity triggered a legitimate suspicion the customer was engaging in money laundering or some other illegal financial activity. Now, because of the PATRIOT Act, which greatly expanded the category of suspicious activities that would trigger an SAR filing, and as a result of "defensive filings" by banks, the kinds of transactions coming under scrutiny are often routine and not indicative of any unlawful activity.

The mindless reporting of this kind is nothing more than plain eavesdropping by bank officials who are eager to gain favor with federal regulators, and it also reflects the federal government's increasing desire to gather data on all of its citizens for no reason.

It has gotten so bad that one banker informed Barr that his bank has set quotas for increased numbers of SARs to be filed each reporting period.

You may be in sympathy with the banks, since the federal government is prosecuting banks for not filing enough SARs, failing to file a report with federal agencies on a customer simply because he may be using an ATM more frequently then the norm seems an overreaction, but it is happening.

What happens to the information that the government is gathering from banks from filing SARs? Beyond gathering the data and storing it in its massive computers, hardly anything. Of the nearly 700,000 SARs filed in 2004, less than 900 were actually passed on to a law enforcement agency for follow-up.

What is being lost in all of this is financial privacy. Financial privacy used to be something very important in the U.S., but it now appears to have been discarded as outdated.

It’s been said before, and we’ll say it again: real financial privacy does exist in many offshore havens where banking secrecy is the law; and where privacy is not routinely waived, but only after judicial review, notice to account holders and determination of probable cause.

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