Political News

Waters adds a new target to Democrats' list: credit agencies

Posted February 26, 2019 6:30 p.m. EST

— Newly empowered House Democrats have outlined some high flown priorities -- the Green New Deal, Medicare-for-all, tax hikes for the rich -- but Rep. Maxine Waters has at least one very concrete target: Credit agencies.

A bill drafted by the California Democrat would aim to expand free access to consumer reports and credit scores. It would also allow consumers to more easily contest inaccuracies in credit reports, as well as impose additional oversight of credit scoring models and limit the use of credit checks for employment purposes.

Waters long advocated such changes as ranking member of the House Financial Services committee and is now working to advance legislation through the Democratic-led chamber as the committee's chair.

During a Tuesday hearing, she and other members grilled chief executives from the three leading consumer credit firms: Equifax, Experian and TransUnion.

Waters pointed to the massive 2017 Equifax consumer data breach, in which the sensitive information of millions of Americans was stolen by a still-unknown entity, lamenting that consumers are unable to exert control over their financial data.

"Consumers did not choose to entrust these companies with their personal information, and they do not have the option today of choosing a different company to maintain their consumer credit data records or having their information deleted from the major credit bureaus' databases, even following these egregious breaches," Waters argued in her opening statement. "To credit reporting bureaus, consumers aren't consumers. They are commodities."

And although Republicans are largely opposed to her nearly 200-page bill, the credit reporting agencies received criticism on a bipartisan basis throughout Tuesday's hearing.

Lawmakers repeatedly returned to issues such as data protection and consumer privacy, confusing processes for correcting factual errors in credit reporting and a lack of competition in the industry. Rep. Patrick McHenry, the top Republican on the committee, went so far as to label the trio an "oligopoly."

"What I see here is an oligopoly. Right? The three of you not really competing, and the consumers are the ones who are losing out," McHenry said.

Another bill introduced by Waters and other Democrats would prevent adverse financial information such as late student loan payments from being added to credit reporting for impacted federal employees and contractors during government shutdowns and for three months afterward.

Equifax CEO Mark Begor contended it isn't needed "because there's other tools in place to support those impacted government employees."

In his prepared statement, Begor also joined the other executives in expressing strong reservations about Waters' broader overhaul plan.

"In general, the credit reporting industry has a strong track record of accuracy when it comes to consumer reports; however, despite our best efforts, errors still occur, which result in consumer complaints or media publicity. But these complaints and publicity do not mean that the current system is broken," he wrote.

Opponents claim the changes proposed by Waters and other Democrats could lead to more unreliable data in credit reporting, potentially resulting in decreased predictive capabilities among financial institutions and riskier loans.

Waters and her Democratic colleagues face an uphill climb in passing any meaningful legislation with Republicans still in control of the Senate.

But it's clear that Waters is focused on advancing the issue as part of a broader appeal by the party to younger, less economically secure voters.

At an event in New York City last Friday, Waters pitched ideas behind some of the bill's reforms as a boon to younger Americans who carry student loan burdens and work multiple jobs.

"[O]ne of the things I talked to the banks about is, I want you to create a millennial project. I want you to tell me how you're going to stop treating millennials the way you treated us traditionally when you looked at our backgrounds and our credit records and how many jobs we've had and decided whether or not we were stable or not," Waters said. "And when you look at the millennials and you talk about stability and you say, well they work three or for jobs. They're working for Lyft, they're working for Uber and they're waiting tables, they're doing that because they can't make enough money at one job."