WASHINGTON — Key lawmakers said Tuesday that they are fed up with regulators' snail-like progress on writing regulations for credit reports, and that they are considering giving the Federal Trade Commission power over the banking agencies to get the job done.
At a House Financial Services Committee hearing, lawmakers expressed frustration that a law they passed in 2003 to make it simpler for consumers to correct information on their credit reports, among other things, still is not fully implemented. The Fair and Accurate Credit Transactions Act required the five banking, thrift, and credit union regulators to coordinate with the FTC in writing new rules, many of which have not been finalized.
"I'm very disappointed in the agencies and their inaction on the FACT Act," said Rep. Spencer Bachus of Alabama, the committee's top Republican.
He cited a pending advanced notice of proposed rulemaking the agencies released in March of last year that would establish rules for how to resolve dispute over a person's credit history and improve the accuracy of information provided to credit bureaus.
"They have yet to take any further action" in that area, he said. "I can't imagine why that is so. The implementation of these provisions would go a long way toward making it easier for consumers to correct their credit reports."
When representatives from the FTC and the Federal Reserve Board said they could not offer a timetable for finishing the rules, noting that many agencies are involved, House Financial Services Chairman Barney Frank suggested empowering one agency to finish the process.
"Maybe we have to establish a lead agency to deal with this," the Massachusetts Democrat said. "That may have been our problem, and I understand trying to get all the agencies to work together could be difficult. One of the things we will think about is designating a lead agency to deal with this."
Speaking to reporters later, Rep. Frank clarified that he had the FTC in mind.
"If there isn't a lot of progress in the next few months I think you'll see a bill giving the FTC the right … to get into it and make decisions," he said.
Rep. Frank returned to the subject later in the hearing, asking a second panel of consumer and industry representatives who should be given primary rulemaking authority.
Chi Chi Wu, a staff attorney with the National Consumer Law Center, said the FTC should get that authority. "We are unaware of any public enforcement actions by the banking regulators" against institutions that provide poor or incomplete information to credit bureaus.
Anne Fortney, a partner in the Washington office of Hudson Cook LLP, said that the FTC and the Fed should share rulemaking authority, but Rep. Frank countered by saying that setup might not help.
"The FTC and the Fed have joint jurisdiction on writing rules defining unfair and deceptive practices, but the Fed has refused to issue rules," he said.
Leonard Bennett, testifying on behalf of the National Association of Consumer Advocates, said that the FTC has more substantive knowledge on the issues than the Fed.
Rep. Frank said he was "inclined to agree" with that assessment. "The banking regulators — it's hard to get them concerned about something other than safety and soundness."
Other lawmakers used the hearing as an opportunity to beat up on the Fed for failing to take action or moving too slowly on consumer issues ranging from mortgage lending to credit card practices, as well as credit reports.
"One of the problems identified seems to be that the Fed has not used its mandate to protect consumers, or if they do use it, they do it very late," said Rep. Carolyn Maloney, the chairwoman of the committee's financial institutions subcommittee. "Whether the issue is subprime lending or credit cards practices or bank fees or today's credit reports, the problem of Fed inaction seems to be a consistent theme."
During the hearing Rep. Maloney fired several questions at Sandra Braunstein, director of the Fed's division of consumer and community affairs.
"Can you identify concrete steps that the Fed is taking in this area of credit … reports to carry out that mandate through regulation, guidance, or government action?" she asked.
Ms. Braunstein responded by saying finalizing the credit reporting rules is "very important" to her agency.
"It is a priority to us, and we have been working on these rulemakings. … We have been working with the other agencies, and we will continue to do so," she said.
Rep. Maloney asked if Congress should set a deadline to force action, saying that "so many years to accomplish a congressional task is really ridiculous and unacceptable." She also asked what the Fed's position was on giving one agency the lead to finish the rulemaking.
Ms. Braunstein repeated that she could not speculate on when the agencies would finish the rules, because there are so many agencies involved, and she said that imposing a deadline would be up to Congress.
Giving one agency the lead power would work only if it could supersede input from the other agencies, she said. "I think that that might take care of some of the issues, but it's not going to take away the differences of opinions between the agencies, even to have a lead agency, unless that lead agency was invested with the authority to overrule everybody else and move forward, regardless of if there was agreement or not."
Rep. Frank jumped in to say, "That could happen."
In an interview after the hearing, Ms. Braunstein said the agencies "are coming at this from different perspectives, because we each have different levels of responsibility for different types of organizations that we supervise."
When asked whether the Fed was beginning to feel pressure from lawmakers to be more proactive on consumer issues, she said it was not. "I don't think that we have needed to make changes. I think we have been taking action on a number of fronts."
