Magazine article American Banker

Editor's Note

Magazine article American Banker

Editor's Note

Article excerpt

The single biggest fight financial services firms are waging in Washington is over the Fair Credit Reporting Act.

Amendments made in 1996 to this 1970 law paved the way for a nationwide credit granting system to take hold. The amendments prohibited states from enacting laws on a host of lending-related issues - from macroquestions such as how a company may use data about its customers to micropoints like when a loan may be considered past due.

But Congress preempted the states only through Jan. 1, 2004, so lenders are scrambling to persuade lawmakers either to extend the amendments or, even better, make them permanent.

In our cover story, freelance writer Bill Stoneman takes a look at the industry's arguments, including claims that the cost of credit would increase and consumers would have a tougher time getting loans. Bankers also argue that lenders may stop giving information to credit bureaus in response to any new state laws ramping up the legal liability for inaccurate reports. Without high- quality reports, lenders could become more conservative or face increased losses, especially in states that adopt particularly restrictive rules.

Opponents counter that the states are better at protecting consumers and should be given the authority to enact laws that respond to local lending abuses.

Deputy Washington bureau chief Rob Garver updates last year's cover story on class actions with a look at a Supreme Court decision expected to settle an important question: Can customers who sign arbitration clauses proceed as a class rather than individually? …

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