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
“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.