Sen. Connie Mack, R-Fla., is threatening to block a vote on his regulatory relief package unless Senate Democrats agree to revise the bill's fair credit reporting rules.
Although regulatory relief is a top industry priority, the American Bankers Association and other trade groups have complained that the bill's fair-credit reporting rules could leave banks exposed to burdensome state laws.
They asked Sen. Mack to push for a federal rule that would prevent states from enforcing their more restrictive fair credit laws. They also asked the senator to protect banks from liability for unknowingly providing incorrect information to credit bureaus.
"The concern is that you have a standard set by the federal government but states could come in with another that is extremely strict and unworkable," said Nessa E. Feddis, the ABA's senior federal counsel.
Republican leaders added the fair credit reporting provisions in order to attract Democratic support for the regulatory relief bill, which was approved in September by the Senate Banking Committee.
The regulatory relief package would streamline real estate settlement procedures, eliminate redundant reporting requirements, and reduce paperwork.
The fair credit rules would require consumer reporting agencies to investigate and update disputed information within 30 days. Also, the bill would make banks and others furnishing information to consumer reporting agencies share responsibility for correcting erroneous information.
The measure also would give the Federal Trade Commission the power to fine violators of the fair credit reporting laws.
The measure could run into partisan opposition. Democrats may resist making any changes to the fair credit reporting rules, said an aide to Sen. Richard H. Bryan, D-Nev., a key supporter of the provisions on fair credit reporting. "We don't feel wholesale changes are in order," the aide said.
Separately, Democrats on the House Banking Committee have asked the panel's chairman, Rep. Jim Leach, to push for new rules on fair credit reporting. Their plan is identical to legislation passed by the House during the last Congress. House Democrats would prohibit credit bureaus from selling information to direct marketers and would make furnishers of credit information liable for penalties if they provide information they "know or should have known" was incorrect.