Congress should not permit a law governing credit reporting to

expire at the end of this year because of the law’s strong

consumer benefits, three federal and state financial-services

regulators told a congressional panel on Wednesday.

But those regulators — from the Federal Reserve Bank, National

Association of Insurance Commissioners and Conference of State

Bank Supervisors — were challenged by Julie Brill, assistant

attorney general of Vermont, who said Congress should let the

law lapse.

“The states need to serve as laboratories of democracy in this

incredibly important area and to assist Congress with what

works,” said Brill, who is co-chair of the privacy working group

of the National Association of Attorneys General. She said the

current credit-granting system is not uniform and that states

like Vermont with stricter pre-existing laws have not suffered

because of them.

Brill found a receptive ear among Democrats on the House

Financial Services Subcommittee on Financial Institutions in the

second of a series of hearings on the Fair Credit Reporting Act

(FCRA). The hearing featured 21 witnesses.

“Sometimes this discussion sounds a little Orwellian to me,”

said ranking minority member Bernard Sanders, an independent

from Vermont who caucuses with Democrats. “The people who say

they trust the states to do the best job” change their mind when

businesses say federal pre-emption of tougher state laws is


When subcommittee Chairman Spencer Bachus, R-Ala., questioned

Brill’s stance in light of Federal Reserve Board Chairman Alan

Greenspan’s support for the extension, Sanders interjected, “In

Vermont, some of us do, occasionally, dispute Chairman


The industry and broader business communities are mounting a

major lobbying push this year to extend the FCRA pre-emption

Congress enacted in 1996. Business groups worry that failure to

reauthorize the extensions would lop a full percentage point off

the gross domestic product and limit consumers’ ability to get

quick loan decisions.

But privacy and consumer advocates say that states need to fight

for stricter privacy laws and that the 1996 act may have spurred

an increase in identity theft.

Howard Beales, director of the FTC’s Consumer Protection Bureau,

said on Wednesday that the agency’s five commissioners have no

official position. A top Treasury Department official said the

same thing last month but dwelled on the concern about ID theft.

But a solid majority of those who testified on Wednesday urged

extending the pre-emption. They represented groups such as the

U.S. Hispanic Chamber of Commerce, Allstate, the National

Multi-Housing Counsel, Citizens for a Sound Economy, the East

Los Angeles Community Union and the major credit-bureau


Opponents included the U.S. Public Research Interest Group and

National Fair Housing Alliance, and a trial attorney with the

National Association of Consumer Advocates.

“While we generally oppose pre-emption, we believe that the

benefits of uniformity to our credit-granting system and the

value of this system to consumers and our economy outweigh our

objection in this case,” said Joseph Smith, the North Carolina

Commissioner of Banks who testified on behalf of the Conference

of State Banking Supervisors.