Financial Reform Should Start With Foundation

Paul Krugman addresses the problem with the financial "reform" in this oped:

http://www.nytimes.com/2010/04/26/opinion/26krugman.html?partner=rssnyt&emc=rss

The problem with this bill is that there is not enough reform of the credit-rating agencies. If Congress were truly serious about reform, this would be where to start. Not only at the corporate level with Standard & Poors and Fitch's, but with the credit reporting agencies that report on individuals to lenders. Both of these systems are set up to serve the interests of big business, rather than to protect the public or the individual citizen. The purpose of both credit rating agencies and credit reporting agencies have veered off course and are in need of heavy regulation to get them right again.

Credit rating agencies started out as a way to help lenders rate the risk of lending to certain companies, funds or capitalize large business deals. They have become a tool to push through bad business deals.

Credit reporting agencies started out as an unbiased way to rate individual's credit worthiness. It has turned into a tool to allow creditors to charge ridiculous rates of interest and to strongarm people who would otherwise not use credit to do so.

Nobody questions the right of credit reporting agencies to gather sensitive financial information on individuals and then provide that information about individuals to possible creditors (now expanding to employers and insurers). Nobody questions the idea that these agencies have the right to use this information to produce a credit score that we all have to pay to see. Have you ever had erroneous information on your credit report and tried to have it removed? It can be a nightmare multiplied by three. Why do the credit reporting agencies get to decide whether I have enough credit accounts opened? Wouldn't it make more sense for each of US to decide whether we need credit cards or no? And why shouldn't the credit reporting agencies be civilly liable for reporting erroneous information on our credit reports that cause us thousands of dollars on a mortgage or car loan?

We have little or no control over the information that is gathered or reported, the accuracy of the information gathered or reported or the credit score that is created by this information. But the credit score controls the amount of interest we will pay on our mortgages and car loans, how much our insurance premiums will cost and sometimes whether we get a job or not. Who pays these companies to report on us? The lenders. Who benefits if we all have low credit scores? The lenders. There is a built-in motivation for the credit-scoring agencies to adjust their algorithms to keep scores low so that lenders can make more money from credit transactions.

How in the world did we all allow ourselves to become enslaved to something over which we have absolutely no control? And isn't it time that something was done to stop this nonsense?

Credit scoring and credit rating are both the foundations upon which credit is built or destroyed, approved or denied. If there is to be reform, don't you think it makes sense to start with the foundation?

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Change We Need: Financial Regulations

TODAY THE DCCC SENT ME AN EMAIL ASKING ME TO GIVE THEM SOME FEEDBACK ON THE KIND OF CHANGE WE NEED TO MAKE IN THE COMING YEAR. THIS IS WHAT I TOLD THEM:

Change the banking and finance laws so that credit card companies can no longer charge usurious interest rates and change the terms of agreements capriciously.

Require credit reporting agencies to independently verify the information that they provide for accuracy and to be liable for any incorrect information that they do not remove from a credit report.

Require credit reporting agencies to change their credit scoring algorhithm so as not to unfairly penalize people who do not own credit cards but are responsible about paying their other installment agreements (such as car loans, mortgages and student loans).




Pressure state legislatures to overturn the rule that allows insurance companies to use credit scores to unfairly charge higher premiums to their customers.

Make it illegal for anyone to check my credit information without my written consent unless I maintain a current balance with their company and force the credit reporting agencies to allow me to access my credit report whenever I want.




Barring these changes, outlaw credit reporting agencies entirely as they have unprecedented and unconstitutional powers over the day-to-day lives of the average American citizen and the citizen has absolutely no power over them.

Why should there exist companies who can collect private financial and personal information about me and then proceed to allow people that I don't even know to view that information but regulate whether or how much or how often I can view the same information?

If the information that they provide causes me to have to pay more for rent, prevents me from obtaining employment, causes me to have to pay more for my insurance, causes me to have to pay higher interest rates on my mortgage, car loans or other credit account, they should be financially liable for any wrong information that they provide.

If they are going to collect this information and it is going to affect me so greatly, they should have to be responsible for the accuracy of this information.




It is an OUTRAGE that these credit reporting agencies are allowed to screw the American citizen every day and get away with it. The credit scores they generate are being used as a tool to justify overcharging, unfairly limiting access, and discriminating against the working class American. Ironically, this credit scoring system was developed to make the granting of credit more fair in times when discrimination in lending was rampant. Now it is used as a tool of oppression to discriminate against the very people it was designed to help.

REGULATE IT.

That's one area where you can change some things; go to it.

That is what I told them and I stand by it, but, y'all, don't hold your breath.

Click on the link to find out how the credit reporting agencies are now working within the medical community to exert further control over the American public. Let's get up in arms and put a stop to this NOW, folks.

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