Bank lobbyists are pushing for federal aid to overturn consumer privacy laws on the grounds that they impede attempts at trapping terrorists.

The industry is appealing to Homeland Security Director Tom Ridge and legislators for federal money to block state privacy protection laws that prohibit banks from sharing information without permission. Bankers say such regulations could prevent them from alerting authorities of suspicious activity.

"We would have trouble communicating with law enforcement ... and it would be extremely chaotic. We need a uniform privacy standard," said David Liddle of the Financial Services Roundtable, an industry lobby.

But some state leaders don't buy it, saying state laws make adequate exemptions for law enforcement. They suspect bankers are exploiting the national security issue to disguise what they're really after: the freedom to sell customer information for profit.

"What they ultimately want is the full use of the financial information of their customers for marketing purposes. This is about money," said North Dakota state Rep. Jim Kasper, a Republican who wants to toughen his state's privacy laws.

The national security argument is the latest twist in the banking industry's long-running fight against information-sharing restrictions cropping up in consumer protection legislation around the country.

A handful of states permit banks to share or sell customer information to outside companies if accountholders approve the sale first.

These "opt-in" laws in states such as Alaska, Illinois and Vermont are tougher than a recently enacted federal law that allows financial institutions to share information unless consumers instruct them not to.

Banking lobbyists have defeated opt-in legislation in several states and now have their sights focused on California, where Democratic Gov. Gray Davis is expected to sign a proposed opt-in requirement if lawmakers approve it.

"If California were to pass a privacy bill, it could set the stage for other states to follow suit," Liddle predicted.

The banking industry is hoping that its financial donations to Washington's power brokers could put a stop to the law.   As one of the biggest political donors, banks and financial institutions gave some $300 million to Republicans and Democrats in the 2000 elections, the most of any economic sector,  The financial services sector routinely tops all other industries in lobbying spending, according to studies by the Center for Responsive Politics.

Roundtable members recently asked Ridge to step in, telling President Bush's homeland security chief they fear state laws would prevent them from tipping federal authorities about suspicious customers as required under new federal anti-terrorism laws.

Ridge hasn't decided whether to intervene.

"We will work with the states and private corporations in order for both sides to be able to meet their various obligations," Ridge spokesman Gordon Johndroe said.

The Roundtable also is lobbying for two proposed bills in the House that would block or supersede the state laws.

One would place a moratorium on state financial privacy laws while a task force studies how they affect the flow of information that affects national security. The other would set federal standards that would supersede state financial privacy laws.

The legislation's first stop would be the House Financial Services Committee's financial institutions subcommittee, whose chairman has already heard from the industry.

Rep. Spencer Bachus, R-Ala., said he doesn't plan to act on either bill immediately — unless Ridge or law enforcement officials raise concerns.

"Right now it's a solution to a problem that doesn't exist," Bachus said. "I've not heard from any law enforcement or regulatory agencies that the privacy laws are a hindrance."

Privacy advocates say state privacy laws and federal law already contain broad exemptions for law enforcement, and there's no reason to weaken the state laws.

"There is no element of security in having a bank or other financial industry sell or share or lease information to any source," said Tena Friery of the San Diego-based Privacy Rights Clearinghouse.

The banking industry lobby, however, is trying to convince federal officials that the state exemptions aren't enough.

"So they say if the feds come to you and ask for information, then you give it. If everybody's opted out of it, what can you give them, 'We lost the trail of XYZ somewhere in Vermont?"' Liddle said.

At least two other industry groups, the American Bankers Association and the Financial Services Coordinating Council, are also concerned about some of the state restrictions.

"I don't think that explicitly a legislator would try to hurt the exchange of information that would allow law enforcement to do what they need to do, but it's the ultimate unintended consequence," said Jim Pitts, executive director of the Financial Services Coordinating Council.

The Associated Press contributed to this report.