Marking a further expansion of bank powers, the Federal Reserve Board last week ruled that Norwest Mortgage Corp. in Des Moines can provide employment histories to third parties for a fee.
Norwest will compile the names of past and current employers, salary levels, and the duration of employment. Individuals, most of whom would be seeking loans, must consent to the search.
The mortgage company, which will sell this service to banks, credit unions, and other lenders, will not assess creditworthiness.
The Fed ruled that collecting mortgage data is "closely related to banking" because institutions normally collect this information in the course of business. Also, it said approval will not adversely affect the marketplace.
"It is just a natural extension of the ability of banks to operate a credit bureau, which they have the power to do," said Melanie Fein, a partner at Arnold & Porter.
"It is clearly financially related. It is clearly closely related to banking," she added. "I wouldn't think there would be any question that this would be a permissible activity."