WASHINGTON -- Lenders appear to have little chance of salvaging a fair-credit reporting bill that they can support after a decisive Senate vote on Wednesday.
"We are less happy with the bill than we were before, and we weren't all that happy before," said Joe Belew, president of the Consumer Bankers Association.
The Senate voted 87 to 10 in favor of a bill that includes a leadership amendment giving states the right to pass tougher measures on their own after a five-year waiting period.
Credit providers oppose that provision, which they say will make it impossible for them to build a nationwide business.
"What's the point of setting up a nationwide system if you're still subject to attack at the end of the five-year period," said Edward L. Yingling, chief lobbyist for the American Bankers Association.
The ABA is opposed to the Senate bill, Mr. Yingling said.
Most credit providers assume that Congress is unlikely to consider extending the preemption on state laws at the end of the five-year period. As a result, the five-year preemption is effectively the same as no preemption at all for most credit providers.
"In some ways it's even worse," added Mr. Belew. "You don't know what's going to happen in six years."
Activists Encouraged
By contrast, consumer organizations were cheered by the Senate vote. The leadership, or manager's, amendment not only improved the bill in their eyes, but opened the door for still more improvements when the House and Senate negotiate a final bill.
"We hope that the final bill will be a better bill for consumers than the Senate bill is now," said Chris Lewis, a lobbyist for the Consumer Federation of America.
Mr. Lewis said his organization accepted the leadership amendment -- which includes some items he opposed -- largely because of the provision ending, or "sunsetting," the preemption on state action after five years.
The bill's two managers, Democrat Sen. Richard Bryan of Nevada, and Republican Sen. Christopher H. Bond of Missouri "both realized that they had to deal with preemption in order to move a bill forward that could be labeled as an advance for consumers," Mr. Lewis said.
With the Senate vote, he said, the prospects for fair credit legislation have improved significantly.
The House Version
Still up in the air, however, is the House bill. The bill that cleared the House Banking Committee represented a major improvement for lenders over early versions of the legislation, but credit providers remained lukewarm at best about the legislation.
Rep. Joseph P. Kennedy 2d, D-Mass., chairman of the subcommittee that first considered the bill, has delayed floor action in the hopes of winning new concessions from the industry.
Although the industry had been reluctant to negotiate on the bill, Rep. Kennedy's hand may have been strengthened by the Senate vote.
The leadership amendment approved by the Senate on Wednesday also:
* Eliminated from the bill the private right of action that would have been created for consumers to sue credit grantors who provide erroneous information to credit bureaus. Instead, the bill leaves it to the Federal Trade Commission to police the flow of information from lenders to credit bureaus.
* Deletes a section from the bill that would have required lenders to notify consumers that they would provide information on them to credit bureaus.
* Removed from the legislation a provision requiring lenders to automatically provide reasons for turning down a credit request.
* Requires lenders to tell consumers when they used information from an affiliate organization as the basis for turning down a credit application.
