Magazine article American Banker

Lawmaker Proposes Uniform Regulations for Credit Reporting

Magazine article American Banker

Lawmaker Proposes Uniform Regulations for Credit Reporting

Article excerpt

Taking another shot at a bill that almost passed last year, Sen. Christopher Bond is sponsoring legislation to revamp credit reporting laws.

The Missouri Republican's bill provides lenders a mixed bag. By replacing a patchwork of state credit reporting requirements with a uniform federal statute, the legislation would make compliance easier and less expensive. The federal preemption would last eight years after the law was enacted.

However, Lamar Smith, vice president of government relations at Visa USA, said the preemption does not go far enough. The measure does not cover state laws that hold banks liable for mistakes in credit reports. "Most states do not have legislation in this area right now," Mr. Smith said. "The problem arises when states do start passing stringent liability laws. It remains extremely important to the industry that you get a uniform federal standard in this area."

The Bond bill would hold banks liable for errors in credit information they submit to credit bureaus if a consumer notifies the lender of the mistake and it is not corrected. At that point, the consumer would have the right to sue the creditor.

This standard would suit the industry, but only if states were barred from overriding it with their own liability laws.

William Binzel, director of government relations for Mastercard International, said that potentially harsh state liability laws could have a chilling effect on banks' supplying information to credit bureaus. …

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