WASHINGTON — House lawmakers and consumer advocates sparred on Tuesday over legislation that would create a public credit reporting agency that President Biden endorsed on the campaign trail last summer.
The House Financial Services Committee held a hearing examining the current state of the U.S. credit reporting system, which is currently dominated by the private credit bureaus Equifax, Experian and TransUnion. Lawmakers debated legislation that would overhaul the system and create a public credit reporting agency, which would be housed within the Consumer Financial Protection Bureau.
Bloomberg
Democrats on the panel were highly critical of the companies, citing complaints to the CFPB of inaccuracies in consumer credit reports. Many of them supported a proposal for a government-run credit bureau to serve as an alternative to Equifax, Experian and TransUnion, which would remain in business.
“The big credit reporting agencies have skirted responsibility time and time again … recently shown by increasing complaints to the Consumer Financial Protection Bureau and litigation during the pandemic,” said House Financial Services Committee Chairwoman Maxine Waters, D-Calif.
But Republicans pushed back on proposals to increase the government’s role in consumers’ credit reports. A government-run credit bureau would be inefficient and prone to fraud, they argued.
“I heard numerous of the witnesses today talk about all the errors that are made by the private-sector credit bureaus, and I'm not defending them — they're not perfect, they're human, they make errors,” said Rep. Blaine Luetkemeyer, R-Mo. “But if you believe the government is going to make less errors than the private sector, who has to be responsible for being able to have good information out and can be sued for it … you're either naive or misinformed, or worse.”
Several witnesses at the hearing endorsed the proposal for a public credit reporting agency, arguing that it would be more accountable to consumers than shareholders or financial institutions that purchase data from the private bureaus.
“The data that [consumers] provide is the product that they sell, and they sell to financial institutions, which is why it's so important that we have a customer-centric institution,” Jeremie Greer, co-founder and co-executive director of Liberation in a Generation, said about the data controlled by the private credit bureaus.
“I think the idea around putting it in the federal government's hands is a good one, to protect consumers and to protect us so that we can operate within society, in the credit markets, and in the employment markets and in rental markets," said Greer, whose nonprofit organization promotes economic empowerment among people of color.
Amy Traub, associate director of policy and research at Demos, a nonprofit that advocates for racial equity, said credit reporting has become a part of the public infrastructure.
“The many problems we're discussing today all stem from the fact that credit reporting is part of our public infrastructure that's under a private stranglehold by three companies,” Traub said. “My written testimony describes why a public credit registry is needed to serve the public interest and how it will develop algorithms that diminish the impact of past discrimination, deliver transparent credit scoring, improve accuracy and offer a publicly accountable way to address disputes.”
Despite support from consumer advocates for a public credit reporting agency to compete with the three private credit bureaus, Republicans on the panel blasted the proposal as a means to give the government more power over consumers’ data.
“This belief that the federal government can somehow run a credit reporting agency more effectively and efficiently in the private sector is garbage,” said Rep. Roger Williams, R-Texas. “Not only will you force consumers to hand over all their data to the federal government, but it will also remove all incentives for the private sector to innovate and come up with new models that will better predict the creditworthiness of borrowers.”
Rep. Patrick McHenry of North Carolina, the top Republican on the committee, said he believes a government-run credit bureau would put consumers’ data at risk of being breached.
“Cyberattacks are also a major issue with federal databases,” McHenry said. “The idea that the government agency doing this will be a better steward of our data is quite questionable, given the track record the federal government.”
But Chi Chi Wu, a staff attorney at the National Consumer Law Center, cited the 2017 Equifax data breach of more than 148 million consumers’ data as a reason to be skeptical of the private sector’s ability to protect consumers’ data better than the government.
“Are we forgetting four years ago about the Equifax data breach, how one of these credit bureaus let hackers take the personal information of half the American adult population?” Wu said. “In terms of privacy, our data is with three private corporations that monetize and exploit it and don't do a very good job of making sure it's accurate.”
Criticism of the public credit reporting agency didn’t just come from Republicans. Rep. Brad Sherman, D-Calif., warned about the controversies surrounding China’s social credit system.
“We see the communist government of China creating a social credit score based on politics,” Sherman said. “As much as I fear and am concerned about what the credit rating agencies can do to consumers, I'm even more concerned about what the government can do. I'm also concerned about any bill that would take a system where the banks pay and instead provide the service for free or the cost of taxpayers.”
"Idea" - Google News
June 30, 2021 at 02:10AM
https://ift.tt/3qAthTJ
A government-run credit bureau? Lawmakers sharply divided over idea. - American Banker
"Idea" - Google News
https://ift.tt/2VWDFI5
https://ift.tt/3d3vX4n
Bagikan Berita Ini
0 Response to "A government-run credit bureau? Lawmakers sharply divided over idea. - American Banker"
Post a Comment