WASHINGTON – The Fair Credit Reporting Act has created cost and time decisioning efficiencies that have helped make auto and mortgage loan application processing quick and inexpensive for consumers. But that system could be threatened if proposed legislative changes to the Fair Credit Reporting Act are enacted in 2003 and FCRA provisions are allowed to sunset, cautions CUNA's Assistant General Counsel. Speaking on a panel at the Fair Credit Reporting Conference hosted by the U.S. Chamber of Commerce on Dec. 11, Jeffrey Bloch told conferees that credit union members, like all consumers, have benefited from quicker loan application decisions and lower transaction costs that lenders have been able to pass down to borrowers because of the current FCRA information sharing provisions that preempt state laws and make for a uniform process of credit reporting. That uniformity, Bloch said, could be affected – and the auto and mortgage lending decision processed slowed and become more expensive – if these provisions are allowed to sunset in 2004 when they are scheduled to expire. Congress will take up the issue of whether the provisions should be extended when it convenes this year. Bloch was joined on the panel by Mallory Duncan, National Retail Federation; and John Schall, National Business Coalition on E-Commerce and Privacy. Bloch discussed several areas of credit union lending that could be affected if provisions in the FCRA Act are allowed to sunset. Regarding auto lending, Bloch explained that "credit unions work closely with car dealers to develop indirect lending relationships. The seamlessness of this process could be disrupted by possible changes in the FCRA if they lead to longer application processes," he said. In addition, to compete effectively with auto manufacturers' 0% financing offers, "credit unions must keep all costs in this transaction to a minimum so that they can offer an effective alternative for their members" said Bloch. CUs would lose their ability to compete against these sorts of offers if the costs of the transaction were to increase. Credit unions have also come to rely on the Internet to level the playing field between themselves and banks in auto and mortgage lending, but changes in the FCRA also "threatens the convenience of Internet banking and lending if decisions can not be made in the timely manner that consumers are used to," said Bloch. Lastly, said Bloch, "the expiration of the preemption provision of the FCRA may lead to in a patchwork of state laws." Any inconsistency would offset the uniform processing of reporting currently enjoyed by lenders. "We recognize that consumers have privacy concerns and credit unions, as service organizations, really do want to address them. But we suspect that what consumers are really concerned about is that their lack of control over their personal information may lead to identity theft. That is where we believe further efforts should be directed," Bloch stated. Speaking with Credit Union Times, Bloch emphasized that CUNA hasn't yet taken a position on preemption yet. He opined that the discussion of the proposed changes to the FCRA would "create an opportunity for those people who want more privacy protection to take certain initiatives." Bloch said that the discussions in Congress may come down to a trade-off between allowing the FCRA to continue in its current form, in exchange for a tightening of Gramm-Leach-Bliley privacy provisions. -

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