Bankers and their suppliers of loan applicants' credit histories would like to believe that a law near completion in Congress will put some persistent recent controversies to rest, allowing them to get on with the business of marketing cards and other types of loans.
But the consumer advocates who supported the legislation, the first major reform of the Fair Credit Reporting Act in more than 20 years, don't want to let the credit industry off that easily.
Still concerned about some of the compromises that worked in the industry's favor, Ed Mierzwinski of the U.S. Public Interest Research Group vowed to "continue to monitor the credit bureaus and try to repeal provisions the banks got."
No Futher Action Seen
William Binzel, director of government relations for MasterCard International, conceded that there will be further scrutiny, but doesn't expect another round of legislation for some time.
"Congress will continue to monitor the industry," he said "but further changes in the law are not likely in the short term."
The bill, the Consumer Credit Reform Act, passed the House in a routine voice vote on June 13. The Senate passed a slightly different version on May 4, and reconciliation and final passage are expected this year.
The bills were in the works for several years, spurred by several widely publicized stories about inaccurate consumer credit records. The reforms will make it easier for consumers to verify their files and correct errors.
Credit bureaus will have to complete investigations of suspected errors within 30 days, set up a toll-free number for consumer inquiries, and for $8 must provide a consumer with a copy of his or her credit report each year.
Industry observers see potential holes the guidelines that may keep them on the political agenda long after enactment.
"We are gravely concerned about affiliate sharing, prescreening, and preemption," Mr. Mierzwinski, consumer program director for the research group, said in the shorthand that has become second nature to the battlers on both sides of the controversy.
Mr. Mierzwinski said that such provisions would establish dangerous exceptions to existing privacy laws.
Preemption, which imposes the federal regulation over any stricter state legislation, is an especially hot issue. Consumer groups - and state lobbyists - feel preemption deprives states of the right to enact tougher standards for credit reporting.
Confusion Seen Ahead
Some of the credit bureau and lender advocates, who lobbied hard for nationwide consistency, were unhappy with what they got: preemption for six or eight years, after which states can change the rules, unless Congress acts again.
"Both the Senate and House bills, as they came out of committee, would have made preemptions permanent, and that would have been far better from the industry's perspective," said Lamar Smith, vice president of government relations for Visa
Philip Corwin, director of retail banking, American Bankers Association said, "What concerns us is that with a sunset on preemption, the next likely legislation will be state legislation. Different states will be going off in wildly different directions."
He explained that compliance will be an expensive proposition for banks from an operational viewpoint. With the possibility of 50 different state laws governing compliance, bankers worry they will face greater liabilities.
"I have no doubts that when the sunset approaches, the consumer groups will begin to push unreasonable legislation proposals in state capitals around the nation," said Mr. Corwin.
Mr. Binzel of MasterCard said consumers in some states could be the true losers after preemption expires.
"If a state enacts liability standards that are onerous to a credit grantor, then the grantor will decide not to extend credit to residents of that state, decreasing the amount of competition for credit products in that state," which could mean higher interest rates, Mr. Binzel said.
Another sticking point concerns prescreening, the technique banks use to identify creditworthy prospects for target marketing. The new rules would allow banks to change their minds if the consumer's circumstances changed after a credit offer was extended.
Mr. Mierzwinski views prescreening as an invasion of privacy, while the new proposal will remove the benefit of guaranteed credit to the consumer.
"Some consumer activists have been opposed to prescreening, but it is important to remember that it is through prescreened offers that competition in the credit card industry has become so intense in recent years," said Mr. Smith. "Consumers have benefited in terms of lower interest rates, lower fees, and a vast array of new enhancements."
Another consumerist concern, affiliate sharing, would allow banks to share their customers' records internally. Under current law, certain types of information - such as a consumer's credit history - can be shared by a company's affiliates, but only if the company complies with the Fair Credit Reporting Act.
As a result, if a consumer is denied credit because of this shared information, the consumer has a right to review and dispute the company's records.
The new amendment would permit company affiliates to share information without its coming under the jurisdiction of the fair credit law.
Consumer advocates maintain that consumers will lose much of the privacy and protections afforded by existing regulations covering credit bureaus if huge lenders effectively set up their own credit agencies, operating outside current laws.
Bankers find other aspects of the bill troubling, including amendments that require increased consumer disclosures, thereby adding to the vaunted regulatory burden. Still, most bankers believe they can live with the new proposals.
But will the debates over fair credit reporting go into a hiatus after at least a half-decade in the legislative limelight?
Ruth Susswein, executive director of Bankcard Holders of America, said, "Access to privacy is an issue on the front burner. Who has access to our personal information is an issue 1 don't see dying down."