by Jeff Sovern
Last week, the House Financial Services Committee held a hearing on credit reporting. I haven't yet watched the recording, but the American Banker's Neil Haggerty has a story here (the story is behind a paywall, but is available on Lexis). Among the topics addressed during the hearing was President Biden's proposal for a government-run credit bureau. Ranking member Patrick McHenry opposed a government-run credit bureau, commenting, according to the article:
"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."
The article continues:
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."
A government-run credit bureau conflicts with conservative ideology. Conservatives tend to trust the free-market, oppose government intervention, and dislike government possession of information. But the free-market does not operate with credit bureaus because consumers don't get to choose which bureau will report their information. Consequently, credit bureaus have little reason to fear consumer displeasure. And studies often indicate that credit reports contain errors. The FCRA has not been up to the task of protecting consumers. If we don't try something else, we are doomed to have a system in which many consumers are denied credit or charged higher prices for it through no fault of their own.
