Permanent FCRA Reauthorization Included in Senate Banking ID Theft Legislation

WASHINGTON-The Senate Banking Committee last week passed a bill to permanently preempt states from creating consumer credit information sharing laws, provide strong identity theft protections, and bolster financial literacy. “There are certainly going to be additional requirements, but it will be well worth it. The balance is there,” CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn said, particularly considering the identity theft epidemic. The credit union community can breathe a sigh of relief regarding the fate of the Fair Credit Reporting Act preemptions for now. No one, other than Shelby, was quite sure how the preemptions would end up in the Senate bill; rumors flew around inside the beltway about a two to three year sunset. NAFCU had “strongly supported the seven preemptions,” Communications Manager John Zimmerman said. Credit unions and other financial institutions had been teased with a mark up in the Senate Banking Committee on Sept 18, but that was ultimately cancelled in light of Hurricane Isabel barreling up the East Coast that day. The only significant amendment to the National Consumer Credit Reporting System Improvement Act of 2003 was likely a positive one. The amendment limits the scope of the affiliate sharing provision and provides for a number of exclusions, according to Kohn. The change appears to be beneficial to financial institutions, including credit unions’ relationships with credit union service organizations. “It should have a limited impact on us, but it’s something we want to take a closer look at,” he explained. He added that CUNA is also scrutinizing the adverse action notices provision, which in the Senate bill requires creditors to notify a borrower if they receive less favorable terms than originally offered because of something in their credit report. Another section of the bill establishes a commission to eliminate duplicative financial education efforts among federal agencies. On the eve of a committee mark up, NAFCU wrote Shelby and the committee’s Ranking Member Paul Sarbanes (D-Md.) recommending permanent reauthorization of preemptions included in the Fair Credit Reporting Act. “As you are well aware these provisions of the Fair Credit Reporting Act (FCRA) are absolutely vital to the nation’s credit system. Without reauthorization, consumer credit will inevitably become both more expensive and less available,” NAFCU President and CEO Fred Becker wrote in the letter. The organization also applauded the chairman’s drive to include greater identity theft protections and financial literacy efforts, but did note its concern over the affiliate sharing provision, which could have a negative impact with credit unions’ information sharing with credit union service organizations. CUNA’s Kohn said he expects the bill to come to the Senate floor sometime after the Yom Kippur recess in the beginning of October, beyond Congress’ currently scheduled adjournment date. The House passed its version of the bill, the Fair and Accurate Credit Transactions Act (H.R. 2622) by a vote of 392-30. Once the Senate approves the bill, it will head to a conference committee to massage the pieces of legislation into identical bills. The FCRA preemption provisions are due to sunset at year-end if the bill is not signed into law. The administration has expressed its support for the legislation throughout the process. [email protected]