St. Louis Post-Dispatch (Missouri)
If Citigroup CEO Charles Prince had glanced up at the sky a couple of weeks back, he would have spotted something all his own. A skywriter wrote the first five digits of Mr. Prince’s social security number in the clouds above New York. A consumer group Foundation for Taxpayer and Consumer Rights, was making a point about financial privacy: We have precious little left.
The rewrite of the Fair Credit Reporting Act, now moving through Congress, could have given consumers much more. It won’t, thanks to lobbying by financial behemoths such as Citigroup. The bill’s marginal improvements are not enough to merit passage.
The biggest drawback in the new version of the Fair Credit law is that it would make it impossible for states to pass financial privacy laws more stringent than federal law. Out would go a California law that makes financial companies get customers’ permission before sharing personal information with its subsidiaries. Much of that information is fairly innocent. A bank might tell its
stock brokers who has lots of money in the bank, so the brokers could hit them up for business. But, in theory at least, the bank could also examine your credit card records for things like big liquor charges, then tell its insurance subsidiary to cancel your auto policy.
The bill also prevents states from passing tougher laws to protect victims of identity theft. That threatens a new Illinois law aimed at preventing credit card companies from mailing cards to people it ought to suspect of using a stolen identity.
There ought to be tougher rules on those things, and the states are more likely to enact them. Congress, after all, is snugly inside the pockets of special interests. Take Sen. Robert Bennett, R-Utah, the second ranking Republican on the Senate Banking Committee. Mr. Bennett carried water for the credit reporting industry when the bill was in his committee. Two weeks later, the big credit reporting agency Equifax raised about $25,000 for the senator’s campaign at a fund-raising bash.
Consumer advocates in Congress extracted some middling concessions. Everyone will be entitled to an annual free copy of a credit report from each of the three major credit reporting agencies; they now charge a fee. Armed with that information, consumers can fix errors.
Federal agencies will have to issue regulations to prevent errors on credit reports. Victims of identity theft would get a tad more protection. Consumers would be able to block credit agencies from reporting debts run up by thieves. Credit bureaus would have to put “fraud alerts” on victims’ credit reports to prevent thieves from opening new accounts; most already do that.
All things considered, the bill’s improvements don’t outweigh its flaws. When the final version emerges from a congressional conference committee, members should think — hard — about how much they would want their creditors to know about their spending habits — and vote no.