Mr. PICKEL. NAMB has not taken a position on identity theft. But that said, we really want the credit reports to be as accurate as possible, and if it is a Federal standard on those issues that you brought up, it would seem like to me that would be better than individual standards by State on those issues, sir. Mr. WATT. Thank you, Mr. Chairman. Mr. Gambill, what is the total profit of your corporation for the issuance of credit reports? That is, when private individuals ask you for a credit report, what is the extent of that? Is it 2 percent, 5 percent? Mr. GAMBILL. Well, we almost have no revenue from that particular source at this point, Congressman. And right now it is underwater. We were trying to build a business there. We acquired a company to help us do online disclosures in a more efficient way. But we are at below break-even at this point on the sale of reports directly to consumers. I would like to see that ultimately become something in the 15 Mr. GUTIERREZ. Why are you losing money on that particular part of your business? Mr. GAMBILL. Well, I am just trying to build my sales. I am trying to build the consumer base that uses the products and services that we have available. And we have a level of cost right now that is greater than our sales. Our sales are about $30 million in that space, and so are our costs. Mr. GUTIERREZ. So where do you derive most of your profits, then? Mr. GAMBILL. From the sale of credit reports to lenders. Mr. GAMBILL. Yes, sir. Mr. GUTIERREZ. I was just curious about where you derived most of your profits from, because I know that everyone else, kind of, was speaking about issuance of credit reports and their availability to the public. And I guess it is the nature of your relationship with the public that I think is different. And that is that you gather information on me and everyone else in this room. You don't ask me if you can use that information, but yet you sell, you barter and you use that information to say, as you say, that makes the majority of your profit in your corporation. So I think it is different than when I go down and, I don't know, get a birth certificate from someone, and say I need a birth certificate because I had to enroll my daughter in school, and I need a birth certificate to get that, in that you are in the business of gathering my information, selling my information. And I think you have a responsibility with me and everyone else whose information you are using in order to generate profit for your corporation. So I think in that sense it is a very different relationship than other kinds of relationships that have been expressed here today. So I would just like to see how this committee could take that very special relationship that not only Mr. Gambill who is here and was kind enough to come before this committee, not expecting to get a very pleasant reception here today. He knew he was going to have to answer some hard questions today about how it is you do it. But, yes, they should make a profit. And I think government has to protect the right of the people that send us here, the consumers, and what the relationship between Mr. Gambill's corporation or any of the other two major corporations that issue credit information that is garnered for the public to make sure that it is the best information available, and they can correct that information. Because, as Mr. Gambill has testified, he makes most of his profit, because he loses money on the other part, from one area, and that is selling the information. So when I walk into a department store and they say, you know, we will give you 20 percent off if you take this credit card, he makes some money. Because they call and say, Mr. Gutierrez would like this credit card, get his 20 percent off. And that is where he makes his money. And I want to make sure that I don't have any problems. I get my credit card, I get my 20 percent off. And that is really not a very, very serious issue, whether I am going to get 20 percent off on a tie or a shirt or something I might purchase that maybe I really don't need. But when it comes to my home. And I think, Mr. Chairman, that we have found, and I think this could be proven in one study after the other, that there are problems, problems that range from 10 to 20 to 25 percent of errors that exist on these credit reports that the credit agencies have taken from the public to make a profit from. So I think they have a responsibility with the public. I am sure they don't want to shirk that responsibility with the public. And I think we have a responsibility. We regulate how much I pay for my telephone bill, how much I pay for my gas. As a matter of fact, the price of my milk has a relationship with actions in the Congress of the United States, even when I buy my Snickers bar, since we subsidize peanuts, or sugar and everything else in this Congress. So the Congress has taken action in order to avail the public of the best possible avenue. And since we do have Freddie Mac and Fannie Mae, and we take on issues, and we have a huge institutional responsibility to guarantee that people, and we have mortgage insurance for those, I mean, we are in the business of helping people in homeownership. And it seems to me that if we just look at it, not so much vis-a-vis the corporations and what their profitthey should make a profit, I agree with that—what is our responsibility to, kind of, blend in all the other actions we are taking to guarantee homeownership, which we know is a key critical point of our economy, that we do that? And lastly, Mr. Chairman, I hope that at some point, since it has now been it is a fact, that insurance and what I pay for insurance, which makes up part of my monthly payment when I go to a bank and they say, Oh, Mr. Gutierrez, you are going to pay PMI, and you are going to pay this for taxes and you are going pay this for insurance, since insurance is also now being driven by what is on a credit report, although I don't understand if I made a late payment what that has to do with lightning striking my house[Laughter.] -but seriously, that does happen. It is a fact that we also look and expand as the insurance corporations now have gotten into using the credit bureau in terms of determining what a person will pay for insurance, because that could mean a lot of difference in someone's home ownership. Thank you, Mr. Chairman. And I want to thank all of the panelists for coming here today. They have been very, very informative. Chairman BACHUS. I appreciate it, Mr. Gutierrez, I would just, if you will yield for an additional minute, I would simply say that I don't disagree with what you are saying. I think that I would point out that the information the credit reporting agencies are getting is not actually by going through our records, it is people that are furnishing those records. We do business with someone and that party supplies to them our record of payment or our credit relationship with the people that they are in association with. And then they actually share it, not with the general public, but they share it with people who we go to, like you say, where we go to someone and ask for, How about, you know, a $10,000 loan or a $200,000 mortgage? Then they share it with that person. They are not putting it out in the public domain. But I think that you are asking and thinking, I mean, we are all asking these questions, and that is the way we get a decision-making. The gentlemen from Ohio? Mr. TIBERI. Thank you, Mr. Chairman. Chairman BACHUS. Mr. Tiberi? Mr. TIBERI. Mr. Gambill, let me direct a question to you, at least, let me give you my bias up front. I believe we should extend, permanently, FCRA and I have introduced a bill with Representative Lucas. Not only to do that, but also to create a uniform standard with respect to privacy. And I have seen, as a realtor, before I came to Congress, the incredible result that the amendments to FCRA had with respect to consumer credit in Ohio, in central Ohio, where I was a realtor. Now, put on your prognosticator hat, if you can, and tell me what you think would happen if my State legislature, and I was a State legislator, in the chairman's State legislature. And the ranking members State legislature, in Vermont, created three different types of standards that could happen if we don't extend FCRA, the amendments to FCRA. What would happen in terms of your role as a person who is obviously very much in the middle of the whole credit scoring issue? Mr. GAMBILL. Congressman, we would have to invest in and develop significant new technologies to ensure that we complied with whatever the rules were relative to a consumer who was either seeking credit in Ohio, but had lived in Vermont, or was seeking credit in Vermont, but had lived in Ohio, or was seeking credit in Vermont or Ohio, but the credit grantor was in Delaware or South Dakota, to be sure that we understood how all of those rules interacted together. Mr. TIBERI. And that would cost how much? Mr. GAMBILL. Oh, a couple of million dollars per time. Mr. TIBERI. And that would come from the Federal government, you assume? Mr. GAMBILL. No, sir, I am assuming that I would try to extract that from my customers Mr. TIBERI. Okay. And your customers Mr. GAMBILL. -who use the information, who then are going to try to extract that from their customers. Mr. TIBERI. So someone is ultimately going to pay for it? Mr. GAMBILL. Yes. Mr. TIBERI. And what may end happening is that that first-time homebuyer may actually end up not being able to qualify for a first home because of increased cost to their mortgage. Mr. GAMBILL. Right. If a lender's costs go up, they either have to lend to less risky people, or charge more to the people they lend to. Mr. TIBERI. Mr. Courson. Did I say that right? Mr. COURSON. Correct. Mr. TIBERI. Can you comment on that, as far as the lending industry? Mr. COURSON. Sure. Well, unfortunately, I have been around this business long enough; I have seen how it works without this. The issue of trying to get a borrower's credit history who has lived in other areas is a nightmare. It is slow, it is debilitating and very costly. And the gentleman's correct that, in fact, the cost of trying to put this together, somebody is going to ultimately pay, and it is going to be the consumer. Mr. TIBERI. Thank you. Mr. Moskowitz? Your testimony was very good. Let me ask you to expand on it, if you would, from a Wells Fargo perspective. And that is, and you may not be familiar with my legislation with Mr. Lucas, but taking the FCRA point one step further, how would a national standard on privacy impact Wells Fargo, and then ultimately, the person who has a loan with Wells Fargo, if we go ahead and take that step and do it? Mr. MOSKOWITZ. Obviously, we believe that in a multi-jurisdictional company like ours, the ability to have a national standard, one which provides clarity to consumers, consistency and understanding of what the treatment of their information will be, is something that we think is advantageous. With respect to the issues raised about various jurisdictions creating their own separate myriad of local, county and State-level requirements, we operate in multiple States. We have customers who have accounts in one State and live in a different State. Conflicting requirements would severely impact the liquidity of the marketplaces that we do business in. So for example, mortgages that have to comply with various standards would be more difficult to securitize, would impact the interest rate scenarios that are available now, and would ultimately impact consumers' ability to get credit. Mr. TIBERI. This is the final thought, Mr. Chairman. So correct me if I am wrong: Whether it is with respect to credit, whether it is with respect to privacy, to a multi-jurisdictional company like Wells Fargo or any other company that may be in more than one State, ultimately it is going to cost you more money to deal with those different State requirements, and that will eventually be passed on to your customer. Is that correct? Mr. MOSKOWITZ. That is right. The current system is a model of efficiency in that it allows, in particular, an operating subsidiary of a national bank the ability to efficiently drive down costs, serve customers, have consistency and clarity in a way that we have never seen before. Mr. TIBERI. Thank you. Chairman BACHUS. Thank you. The gentlelady from New York, Miss Maloney? Mrs. MALONEY. I thank the chairman very much for yielding. And I would just like to State that despite the controversies of this week, I think we have to remember that the U.S. mortgage market is the best in the world, and the fact that home ownership is at 68 percent in this country is truly an incredible success. A major contributor to the high percentage is the ease with which consumers can now get approval for mortgages, because of advances in technology, including automated underwriting that relies on the FCRA. Mortgage decisions are now made at speeds that would have astonished people trying to buy a home just a year or two ago. The ease with which people can be approved for a mortgage is one of the major factors that has kept the economic slowdown of the last 3 years from getting any worse. As we all know, in the current low interest rate environment, mortgages are being refinanced at record rates, and this would be impossible without automation and readily available credit histories. And, Alan Greenspan has testified before this committee several times that it has truly been the mortgage market, the refinancing, that has helped our economic situation in this country. The Washington Post detailed the impact that the ability to refinance so easily is having on the economy last Sunday in an article that I would request unanimous consent to place into the record. But to summarize [The following information can be found on page 215 in the appendix.] Chairman BACHUS. Without objection. Mrs. MALONEY. Thank you, Mr. Chairman. To summarize it, it said that since 2001, banks will have processed more than 27 million mortgage refinances by the end of the year. Out of those, homeowners will have converted more than $270 billion of home equity into cash, either to spend or convert high interest debt into very low interest loans, at least another $20 billion that is freed up in lower monthly mortgage payments. And in total since 2001, refinancing will have delivered about $300 billion directly to consumers who will have more money to spend and pump up the economy. That is in comparison to the $263 billion that the Bush tax cuts of 2001 and 2003 will have put back into the economy by year's end, which have less direct impact on spurring consumer spending, because they have gone not only to individuals, but also to businesses and in some cases, State and local governments. |