WASHINGTON -- The Senate Banking Committee handed a partial victory to lenders Thursday by passing an amended credit reporting bill that answered a number of industry complaints.

The bill approved by the panel preempts in part the right of states to enforce more stringent rules and permits separately incorporated bank subsidiaries to share credit information. It also protects credit providers from suits that might arise from inadvertent mistakes.

11th-Hour Improvements

In an important victory for credit card issuers, the bill permits lenders to verify income and other information before final approval of consumers who received solicitations offering "preapproved" lines of credit.

"A lot of improvements were made at the 11th hour, especially in the area of preemption." said Joe Belew, president of the Consumer Bankers Association.

Although the banking industry had opposed the draft legislation that the panel was originally scheduled to consider, Mr. Belew said the amended bill was something bankers "could probably" live with.

But Mr. Belew and other bank lobbyists warned that they expect a much tougher bill to emerge from the House. As a result, the package that emerges from negotiations between the two chambers could be unacceptable to many bankers.

"The House bill is very negative and we are very concerned about could come out of conference," said said Edward L. Yingling, executive director of government relations for the American Bankers Association.

The House bill would not preempt state laws, giving rise to fears among credit providers that they, would have to comply with 50 different state laws in addition to a tough federal mandate.

Also of concern to bankers are the liability provisions in the House bill which they fear could expose them to lawsuits over inadvertent reporting errors.

The House Banking subcommittee on consumer credit and insurance has not yet scheduled a vote on the measure, and many observers expect the panel to wait until next year. The Senate bill now goes to the floor.

Mr. Yingling said the Senate bill still contains "a number of negatives," despite the improvements he said were made.

For example, Mr. Yingling said banks and other lenders would have to overhaul their loan documents and provide consumers with more information on "adverse action" notices sent to consumers when loan applications are rejected.

"It's just more language that consumers won't read," he said.

Activists Complain

Consumer organizations took the opposite tack, criticizing the measure for being too weak. The U.S. Public Interest Research Group, for example, complained that some sections of the bill "erode consumer privacy and weaken current law."

The bill is intended to make it easier for consumers to find and correct errors in their credit reports.

"For millions of Americans, whether you can get credit to buy a car or a house hinges on information in your credit report," said Sen. Richard H. Bryan, D-Nev.

Sen. Bryan and Sen. Christopher S. Bond, R-Mo., crafted the compromise that was approved Thursday on a 15-3 vote.

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