The machine of credit scoring and reporting is evidently in dire need for reform. But exactly how are we possibly going to get it?
The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by Congress in 2010, ensures that you are now eligible for a free copy of your credit score if you are denied a loan based on that score, and also should you get a high interest rate on a new personal loan. This is a positive improvement. But what is the motto of nearly every Republican candidate for president? Repeal Dodd-Frank! Meanwhile the Obama administration is less than willing to push on some consumer legal rights.
Warren designed CFPB as a watchdog that could oversee credit scoring and reporting practices and function a recourse to consumers. The bureau released a beneficial preliminary study in July 2011, which considered how scores purchased by consumers and those shown to lenders can vary, leaving consumers in the dark about their actual creditworthiness. We can be thankful that the bureau is doing these ongoing investigations. But without Warren at the helm, and given CFPB's positioning within the bank-centric Federal Reserve, its impact will be restricted. The industry, along the politicians it lavishes money upon, will try to stymie even its most moderate efforts.
The truth is that fundamental reforms are needed to truly get back our everyday dependance on these credit rating juggernauts. Walker Todd, who spent 20 years within the legal departments from the Fed Banks of NY and Cleveland, assures that to be able to even begin to handle the systemic and structural troubles of the industry, a complete congressional hearing is in order, ideally in three parts, as follows:
1) Job of regulators in the industry. Regulators will come in and confirm under oath just how they conceive their role. (You get a highest possible chance of embarrassment here.)
2) History of the industry. Focus on how the goal and design of the industry have changed from the pre-1990s to the present. This would also address structural adjustments to the banking industry which make credit reporting a mess.
3) Testimony about misuses. Consumers would get to tell their tales about the misuses of credit scoring and reporting.
The overall purpose of the hearing would be to determine if current agreements and systems have improved the availability and condition of credit, downgraded it, or left it about the same.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by Congress in 2010, ensures that you are now eligible for a free copy of your credit score if you are denied a loan based on that score, and also should you get a high interest rate on a new personal loan. This is a positive improvement. But what is the motto of nearly every Republican candidate for president? Repeal Dodd-Frank! Meanwhile the Obama administration is less than willing to push on some consumer legal rights.
Warren designed CFPB as a watchdog that could oversee credit scoring and reporting practices and function a recourse to consumers. The bureau released a beneficial preliminary study in July 2011, which considered how scores purchased by consumers and those shown to lenders can vary, leaving consumers in the dark about their actual creditworthiness. We can be thankful that the bureau is doing these ongoing investigations. But without Warren at the helm, and given CFPB's positioning within the bank-centric Federal Reserve, its impact will be restricted. The industry, along the politicians it lavishes money upon, will try to stymie even its most moderate efforts.
The truth is that fundamental reforms are needed to truly get back our everyday dependance on these credit rating juggernauts. Walker Todd, who spent 20 years within the legal departments from the Fed Banks of NY and Cleveland, assures that to be able to even begin to handle the systemic and structural troubles of the industry, a complete congressional hearing is in order, ideally in three parts, as follows:
1) Job of regulators in the industry. Regulators will come in and confirm under oath just how they conceive their role. (You get a highest possible chance of embarrassment here.)
2) History of the industry. Focus on how the goal and design of the industry have changed from the pre-1990s to the present. This would also address structural adjustments to the banking industry which make credit reporting a mess.
3) Testimony about misuses. Consumers would get to tell their tales about the misuses of credit scoring and reporting.
The overall purpose of the hearing would be to determine if current agreements and systems have improved the availability and condition of credit, downgraded it, or left it about the same.