WASHINGTON -- A House Banking subcommittee approved legislation Friday that would make it more difficult for banks to obtain lists of potential credit card customers and increase penalties for errors lenders make in reporting credit information.

The bill, which is intended to make it easier for consumers to find and correct mistakes in their credit reports, is strongly opposed by banks and credit providers. However, it is expected that the full banking committee will address at least some industry concerns when it takes up the bill next year.

"There will probably be some improvement at the full committee, but not much," said Philip Corwin, a lobbyist for the American Bankers Association.

In its current form, many lawmakers and lobbyists doubt the bill can pass the full House. A different version of the bill, one supported by the industry, was pulled from floor consideration last year after credit providers won on a key amendment.

"We did not look good," said Rep. Larry Larocco, D-Idaho, recalling last year's vote on the Fair Credit Reporting Act amendments. "I am going to do my level best to avoid being a party to another episode like last year's bill."

Rep. Larocco had intended to offer a substitute for the bill that was viewed as much more acceptable to the credit industry. However, Rep. Larocco said he decided instead to work out a package of less ambitious amendments with the consumer credit subcommittee's chairman, Rep. Joseph Kennedy 2d, D-Mass., when it became clear he could not muster a majority.

Once the bill reaches the full committee, he said, he will try again to amend parts of the bill that might inhibit credit flows.

"We have a very, very functional system for granting credit in this country," he said. "How much can we intimidate credit grantors about reporting data to the credit system before they stop providing the basic information that makes the whole system work."

Among its provisions, the bill would make it more difficult for banks to screen credit bureau files for lists of consumers eligible for a credit card. The bill permits such practices, but requires either that the consumer has agreed in advance to be included on such lists or that the the credit card offer be a "firm offer of credit."

Bank lobbyists argue that the definition of "firm offer of credit" is too rigid.

Consumers' Right to Sue

The bill also requires that banks and merchants who regularly provide information to credit bureaus must have procedures to find and correct errors. The measure also requires credit providers to promptly investigate consumer complaints and gives individuals a right to sue credit providers over errors.

The panel rejected an amendment offered by Rep. Maxine Waters, D-Calif., aimed at companies that provide information about individuals who have written bad checks in the past.

The Waters amendment would have required the check guarantee companies to cease business until the Federal Trade Commission certifies that they are in compliance with the Fair Credit Reporting Act.

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