Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : The Solyndra Scandal -- Ignore unavailable to you. Want to Upgrade?

To: joseffy who wrote (539)	7/19/2012 10:06:52 PM
From: Hope Praytochange	1 Recommendation Respond to of 1400

Obama's Credit Report Crackdown Based On Myth Of 'Inaccurate' Data Regulation: The administration's unprecedented move to police credit bureaus for "fairness" is based on a cock-and-bull story that consumer credit profiles are riddled with errors. Early this week, President Obama's powerful new consumer watchdog agency announced it will regulate for the first time the $7 billion credit reporting industry. It claims there's a crisis of confidence in consumer credit reports. "We are here to correct what is not going well," Consumer Financial Protection Bureau chief Richard Cordray said Monday at a Detroit credit reporting hearing. "And we are here to see that this market is made to work better for those who are affected the most." Cordray claimed "inaccurate" credit reports and scores may be "unfairly blocking" some from the credit they deserve. A community organizer at the hearing claimed as much as 40% of reports may be inaccurate. Once again, the administration is manufacturing a crisis to justify a bigger government hand in the market and exercise a radical anti-business agenda. Recent studies have found that, quite the contrary, U.S. credit reports are highly accurate. In fact, they are the model of the world. The most comprehensive study, conducted last year by the Policy and Economic Research Council, found that only 0.5% of the data collected and maintained by the Big Three reporting agencies — Equifax, Experian and TransUnion — contained material errors that adversely affected consumers' credit scores. The study, which oversampled blacks and Latinos, found no higher rates of error between the aggregate data and the data by race. "We found that a vast majority of credit reports are accurate," PERC President Michael Turner said, "and that it is rare for a credit report error to materially impact a consumer's access to credit and the terms of that credit." A 2004 Federal Reserve study, moreover, found the chance of serious errors finding their way in credit histories "appears to be small." It added, "In most cases, the effect of each type of problem on the credit history scores of affected individuals was modest." FICO and other credit agencies account for minor errors when they weight the factors used in credit scoring models. That, the Fed said, means correcting the errors isn't likely to change how an individual is evaluated. In other words, CFPB has no cause for such an overreach. The empirical evidence — as opposed to anecdotal evidence in the form of complaints CFPB is feverishly soliciting on its website — destroys its premise for a massive new regulatory assault on another industry. Any benefits to consumers clearly would not outweigh the huge new compliance costs shouldered by the industry, which ultimately would be passed on to the consumers CFPB deigns to protect. So why the push? It's part of the administration's political agenda to reallocate credit. Equalizing outcomes in credit reporting across racial and income groups serves that goal, called "the democratization of credit." It's no coincidence that Cordray announced his crackdown on credit bureaus in a city hit hard by subprime foreclosures. Or that he invited community organizers on stage in Detroit to accuse credit bureaus and bill collectors of discrimination, while talking about "reforming" the entire credit reporting and scoring system. Cordray, an Obama recess appointee never confirmed by the Senate, claims he has the authority through the Dodd-Frank Act to not only unleash examiners on credit bureaus, but to also rewrite the rules for collecting, maintaining and analyzing consumer credit data. He also says he has the power to enforce his new rules. It's clear this president and his credit czar think credit reporting is biased against minorities. It's also clear they intend to intimidate credit bureaus into "repairing" their "damaged" credit. If they also get away with rewriting rules for credit reporting and scoring to adjust for "cultural differences," the consumer credit data used by the private sector to gauge risk in hundreds of millions of financial transactions will be rendered wholly unreliable.