Senate Passes CU-Backed Fair Credit Reporting Bill
The Senate fought back a proposal to preserve the tough new California privacy law last week and easily passed the fair credit reporting bill, sending the credit union-backed measure on for reconciliation with a similar bill passed earlier by the House.
The Senate version differs slightly from the one passed by the House, with provisions aimed at combating the growing crime of identity theft and the creation of a national commission on financial literacy, an area of major interest to credit unions.
But the focus of both bills remains the renewal of seven federal preemptions of state credit reporting acts, easing the way for credit unions and other lenders to cross state borders to do business.
Last week's vote, 95-to-2, was swift after the Senate did away with a bid by the two California senators, Dianne Feinstein and Barbara Boxer, to prevent the bill from pre-empting California's recently enacted 'opt-in' privacy bill requiring users of confidential financial information to obtain a consumer's permission before sharing their information with third parties.
"We're really pleased with the way it happened," said CUNA lobbyist Gary Kohn, of the overwhelming vote. "When you have 25 amendments out there you could have a long-term debate and get bogged down," he said, referring to the number of provisions debated or dispensed with before the final vote.
NAFCU lobbyist Murray Chanow predicted fast resolution of the two separate versions of the bill, possibly as early as this week. "I think what you're looking at is a quick conference because the goal is passing it before January," he said, referring to the year-end expiration of the current law and its pre-emptions.
The bill includes provisions to extend those pre-emptions permanently and several other important provisions, aimed at protecting consumers. Among them is a requirement that all consumers be given free credit reports from credit bureaus on an annual basis (now only three states require that); that credit card companies truncate (mix-up) credit card numbers and other identifying numbers on credit or debit receipts to make it more difficult for identity theft; that credit bureaus issue fraud alerts when notified of dubious activity on an account; and that consumers be notified when an adverse action notice triggers a higher-rate or other more stringent terms.
The bill would also prevent the states from passing separate laws enacting tougher standards on identity theft.
Another provision restricting information sharing between affiliates, which caused concern earlier among the credit union lobby, has apparently been cleared and should not have any adverse affects on credit union sharing with CUSOs or the corporate credit unions, according to Kohn.
Credit unions, said Kohn, will want to get involved in the proposed commission on financial literacy.
Senate Banking Committee Chairman Richard Shelby (R-AL), the main architect of the Senate bill, insisted his desire was to strike a balance between the needs of lenders to have uniform standards to ease credit availability and the rights of consumers to both protect their information for misuse.
Senate colleagues easily turned away the Feinstein/Boxer amendment on a 70-to-24 vote because they argued to protect the California law would make it more difficult national and interstate providers of credit.