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Mr. MOSKOWITZ. I can't comment on whether or not it should be free or not, but availability and knowledge of what is in your credit report is a good thing.

Mr. SANDERS. Mr. Pickel?

Mr. PICKEL. Well, like Mr. Moskowitz, I don't think I can comment on whether or not it should be free. But I do want the credit reports to be accurate. And I will tell you, sir, as a mortgage loan officer working with consumers, oftentimes it takes a lot of time to work with a consumer on a credit report. It is somewhat intimidating, it is hard to read, I am not sure if they just got it, it would help. But that is not for me; we want it to be accurate, and we want them to get home loans.

Mr. SANDERS. Mr. Fishbein?

Mr. FISHBEIN. I agree that the disclosure ought to be regular and be free for credit reports and scores. I think the industry should actually be promoting this as much as possible

Mr. SANDERS. Right.

Mr. FISHBEIN. in an effort to try to correct the complaints about inaccuracies and inconsistencies. The best way to do that is by providing people with more information.

Mr. SANDERS. Who is going to know about their credit history better than the consumer himself?

Mr. FISHBEIN. Correct.
Mr. SANDERS. Okay.
Thank you all very, very much.
Thank you, Mr. Chairman.
Chairman BACHUS. Thank you.
Mr. Fishbein?
I will ask a question now.

One of my staffers was recently burglarized. You know, they stole his TV and they stole a stereo system. And he went down to the D.C. police department and asked for an incident report on that, and he was charged $10 for it. Do you think he should have been given a free police report?

Mr. FISHBEIN. Well, I don't know whether we want to use the standards of the D.C. police department for judging access to credit reports.

Chairman BACHUS. I mean, do you think that was fair that they charged him for that report?

Mr. FISHBEIN. We hear a lot of talk about new technologies and cheaper and faster. Technologies have a tremendous ability to provide people with information relatively inexpensively. And I think that ought to be pursued very carefully by the industry in an effort to get more

Chairman BACHUS. But you didn't answer my question. I mean, we are talking about free reports; do you think they should have given him a free report? I mean, he pays taxes, you know, he actually pays the city of D.C. Should he have been given free reports?

Mr. FISHBEIN. Well, if the D.C. government had a way of providing this information inexpensively, then I think it could be done. Again, I think we don't want to use that measure. What we are talking about here is

Chairman BACHUS. But you understand what I am saying. They charge money for this report, and actually, he pays taxes to D.C. And actually, as taxpayers, we don't pay taxes to TransUnion.

Mr. SANDERS. Mr. Chairman, I would agree with you. You are absolutely right. Perhaps he should have been given a free report, and maybe if they had Statehood and collect revenues, they would be able to do it. But

[Laughter.]

Chairman BACHUS. Well, actually, I was charged $5 for somebody who ran into my car in Alabama. I was charged $5 for an accident report. I didn't demand any. I guess we could give everybody everything free, but who would pay for the cost of maintaining these systems. The cost would go up, wouldn't it, I mean, if they are giving away 20 million free reports?

And I guess as a practical matter, I am just wondering if all of this was available and free and you could get it for free, why would anybody pay them for a report? How would they make any money? And wouldn't they just go out of business?

Mr. PLUNKETT. Mr. Chairman?

Chairman BACHUS. I mean, if you give away your product, how do you stay in business? I guess that might be my question. And I am asking the two consumer people. I mean, how do you get around that?

Mr. PLUNKETT. Well, revenues for the credit reporting agencies has certainly increased in terms of their direct sales to consumers. But as the bulk of their revenue is generated through the users of the system, the furnishers and those who use the system for risk analysis and other purposes. However, we have seen a growth in premium services that are charging consumers for some items that we think are vital and should be free, like the credit score or

Chairman BACHUS. Well, now, you are
Mr. PLUNKETT. credit reporting information.

Chairman BACHUS. Aren't you charged for a lot of services that are vital today?

Mr. PLUNKETT. I would agree with Representative Sanders that certain government documents are so important, such as a police report, such that they should endeavor to give you those documents as cheaply as possible. In this case, consumers are the subject of these documents. They have an absolute right to ensure that the information about them is accurate. And the best way to do that is to make access easy through free reports. Six States require this already.

Chairman BACHUS. Well, you know, I was just looking, I had a list of when you get a free credit report. Today, current law says that credit bureau has to give a free report to people on public assistance, people seeking employment, people denied credit, people denied insurance, people denied employment, people that think they may be the victim of identity theft. And everybody else pays $9. In other words, if you can afford it, you pay for it.

And I am not talking about accuracy or anything else. I am talking about that it is at great expense that they maintain these systems. I mean, they are a for-profit corporation. And I don't think that there is anything wrong with that.

Mr. SANDERS. Mr. Chairman, could I

Chairman BACHUS. And, you know, if we wanted to start a public agency to maintain records, or something, but I am just wondering even almost the constitutional implications of starting to tell people to give away their product. Does that bother you a little bit from a constitutional standpoint?

Mr. PLUNKETT. I haven't heard, Mr. Chairman, of any constitutional issues being raised regarding the six States that require it now. Overall, it decreases cost in the system, and in many ways makes the system more effective for lenders. If the information is more accurate, they can predict risks more accurately. If consumers correct errors, the lenders have a better system, as well. Overall, I see it as a win-win.

Chairman BACHUS. Okay. All right. Thanks.
Mr. Gambill, do you want to respond?
Mr. GAMBILL. Well, yes, sir. Thank you.

At $9, providing reports to consumer that want it is not a moneymaker. Okay? If it was, you would see us advertising it a lot more heavily than we do now. Our companies aren't that big. The credit reporting companies in America in information services are well under $1 billion in sales. We spend, already, probably 10 percentish of our money dealing with this population of consumers, that we are happy to deal with and help, that are entitled to free credit reports.

So it represents a huge change if we are to go from disclosing 8 million reports a year to disclosing a 100 million, or 200 million.

And as I said, I just don't know how we will do it. I am sure that we will, if we are somehow required to, but I don't know how we will plan for it. And I don't know how we will be able to continue to give the kind of service and automation investment in reverification issues for consumers that are entitled to free disclosures if we have everybody that is responding to e-mails that may go out. There was a recent e-mail that had millions of people opt out unnecessarily. It cost us $2 million at TransUnion just to deal with that kind of thing. I don't know how to mange it.

Chairman BACHUS. Let me say this, we have a vote on the floor. We are going to recess this hearing until the end of vote, and it probably will be at least 30 minutes.

I do want to say this in closing, we have talked about the difference between the report at the credit bureaus, the difference in credit scores. And we have talked about that as an error. But, you know, conservative groups give us a score, you know, and liberal groups give us a score, and I may get a 95 from one conservative group and a 90 from another group. He may get a 2 from one conservative group. And a five from another. But that wouldn't be an

error.

I mean, that would be each group using a little different criteria. And I don't call these groups and say, You have made an error. This other group scored me at an 85, you scored me at a 10. There is a 75 percent discrepancy here. I mean, they are using different input. And, I mean, this is proprietary.

I This is the most popular thing that both sides of the people talking about free credit reports, I just think somebody has got to pay for it. If you ask these credit reporting agencies to pay for it, and

it costs 50 percent of their revenues, that is a problem. I mean, that is almost confiscation of property.

We will recess this hearing at this time.
[Recess.]
Chairman BACHUS. The subcommittee will come to order.
The gentleman from North Carolina, Mr. Watt, is recognized.
Mr. WATT. Thank you, Mr. Chairman.

It is a good way to slip back in and cut the line before everybody else gets back. So I am glad to be able to do that because I have to go to the floor and do something on this class action bill.

This is the third set of hearings we have had on fair credit reporting. And I have been trying to get to as many of the panels as be built about some things that we might begin to coalesce around. And I wanted to try to see, maybe, whether some consensus is beginning to emerge on at least some principles that we could start to draft a bill around.

Mr. Plunkett, your testimony may be interpreted by some to suggest that you are disenchanted with a Federal standard. But it seems to me that most of the things that you raised questions about would probably be worse off if we didn't have a Federal standard, at least in some areas of the country they would be worse off. In some areas of the country they might be better off.

So I guess the question I want to ask you before I start to try to see whether there is any consensus is whether you are advocating for no Federal standards? I don't think that is what you are doing, but I want to clarify and be clear on what it is you are advocating for.

Mr. PLUNKETT. We propose strong Federal baseline standards. We have also endorsed the notion that the existing eight preemptions should be allowed to expire and then where States deem it necessary, they could exceed, not conflict with, but exceed the strong Federal baseline standards.

Mr. WATT. So you are not advocating for expiration necessarily, maybe improvement of the existing standards with that being the base, rather than—and then States could go beyond that? Would that be a fair characterization of what you are

Mr. PLUNKETT. Absolutely, Congressman. And in that circumstance, it would be very rare and quite unlikely, especially initially, that States would choose.

Mr. WATT. But, I mean, is it clear to you that the kinds of things that are covered in the eight standards that exist, whether they are the correct minimum Federal standards, but the kinds of things that are addressed in those eight standards should be the kinds of things that you would set a minimum Federal standard for?

Mr. PLUNKETT. Absolutely.
Mr. WATT. Okay.

And now, Mr. Courson and Mr. Moskowitz, I take it, and Mr. Pickel, also, I guess, all of you agree that there needs to be Federal standards, Í take it?

Now I guess, ideally, if you had a Federal standard, and the standard was good enough nationwide, we wouldn't have to worry about States preempting or States passing something even more aggressive.

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How would you all react to the existing eight things being massaged and clarified in some way and maybe trying to get to some consensus on the things that I have heard really most people complain about? Those are errors and accuracy; credit scoring; dispute resolution; maybe free credit reports, if some consensus could emerge on that; discrimination or adverse impacts on minorities; and identity theft.

Do you all think that those are the kinds of things that there ought to be some Federal standard for, I guess?

And I am assuming you all were probably for the Federal standards whenever this thing was done 15 years ago. But now you have decided it is a good idea to have that Federal standard. Are those kinds of things the things that we also should have some minimum Federal standard on?

Mr. COURSON. Congressman, as you know, you are correct in saying the uniform national standard fo consumer credit information credit the free flow of capital across State lines. Mortgage lenders are very concerned that their ability to originate loans across State lines with consistent standards will be in jeopardy if the preemptions disappear. The preemptions were put in place in 1996, and as a result, mortgage lenders are doing increasing volumes of business, both purchase and refinance. The system is working. Mortgage lender flow enable credit to move back and forth, across State lines.

My concern is that once Congress gives States the opportunity it will block the free flow of credit requirements among States. My fear is, as we have seen in other areas.

Mr. WATT. I understand that, but would you accept the proposition that on the things that I have just described, the list of things, that there ought to be some Federal standard?

Mr. COURSON. Well, I think you have to look at each of these areas on an individual basis. We are talking about the FCRA including the preemptions that target to some very specific areas. There are other issues that have been discussed today, and our concern is that we don't want to disadvantage the consumers by not maintaining the preemptions so that we can continue to have free flow of credit.

There are other issues to discuss, but I think that we have to realize, too, that the FCRA basically deals with those specific seven items.

Mr. Watt. You mean there is something on my list that should be discussed outside of fair credit reporting? I mean, it seems to me that all of those things are being impacted by fair credit reporting.

Mr. COURSON. Some of them would affect our industry, and others on the panel, also.

Mr. WATT. I know I am over my time, but it would great if I could hear from Mr. Pickel and Mr. Moskowitz.

Mr. MOSKOWITZ. I would echo what Mr. Courson said. The concept of uniform, understood Federal standards that ensure consistency in decision-making is obvious to us. And the ability of a myriad of State regulations overlying those standards would actually undermine the effectiveness of those standards and would ultimately impact liquidity and availability of credit, in general. So we would not be in support of that.

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