ally fit the reality and that the consumers then are armed with the information necessary to address any issues that they may have. Mr. PLUNKETT. Congresswoman, we have a substantive suggestion on that if I

Ms. HOOLEY. Okay. I am ready.

Mr. PLUNKETT. We have found in our research that we would agree here, that the reasons that are provided are very vague and don't go to the specific problem, the specific trade line, as it is called, that is creating the problem or trade line. When you get explanations as vague as, serious delinquency or derogatory public record or collection filed, that is too vague. We need more specific information on exactly which account is the problem, so that you can then act and see if there is an error.

Ms. HOOLEY. Do any of the credit reports come out-any of you can answer this-do any of the credit reports come out, have their score on it, what that score means? Do you know, any of you?

Mr. MOSKOWITZ. Well, I can comment on our ability to comply. with California requirements that obligates Wells Fargo to describe or conclude in an adverse action notice, the requirements for basic drivers of a FICO score, and we provide that information. We have no evidence that that has actually added any value to consumers in addition to the value that is provided into generic action reason codes, or that consumers actually understand what that means.

We are strong advocates of informed consumers, educated consumers and consumers who can take information that they know of themselves to increase their likelihood to obtain credit.

Mr. PLUNKETT. I would respond by saying that if the information we are getting is that, yes, most people don't understand their credit score yet. But the first step is to provide them with the score and with an explanation of the major factors that are used in determining the score. And that is how you start the education proc

ess.

So the California law is something that we would like to see nationally. This is an absolutely essential piece of information that consumers need to have, that then provokes them to ask questions about not just what the factors are, but how they are weighted: What is more important, a collection or a delinquency? And they start asking questions about the underlying data. Is there a problem? Has one a creditor made a mistake in listing a delinquency that is not a delinquency? How do I correct it? This is all information the consumer should have.

Mr. MOSKOWITZ. And I would add one last comment to that, which is that, no credit score and no FICO score has ever been, in our company, the reason for a loan being rejected. It is a reason for a loan to be approved. If those issues or factors arise in the context of evaluating a consumer, we delve more deeply, analyze the reasons, look at the other factors in the broader underwriting spectrum that need to be examined.

Chairman BACHUS. Had a little over 10 minutes.
Ms. HOOLEY. Sorry.

Chairman BACHUS. But I mean you have been a leader on this issue, so I want to give you some leeway.

Ms. HOOLEY. Well, maybe some of these questions I can write them up and have them answer them afterwards. I am really looking for, how do we do this in a way that makes sense for the consumer? How do we make sense, so that again, we can try to prevent identity theft, and again get through the process and make sure that we have accurate reports so that people are not turned down for inaccurate reports? And how do we educate the public on the issue?

Thank you, Mr. Chair, for your tolerance.

Chairman BACHUS. Thank you. Thank you, Ms. Hooley.

One thing that I would say that we talked about sometime, the vagueness of the response, like delinquency or serious delinquency. I think that part of that is civility. We don't want to say, you don't pay your bills or you don't pay on time or the other thing is liability. You know, if you get specific in a report, say that someone doesn't do this or that; I am just wondering if that may not be some of the reasons.

Mr. Meeks?

Mr. MEEKS. Thank you, Mr. Chairman.

Let me ask, Mr. Gambill, first question is how much money does it cost anyway? How much money did it cost to send out a report? Mr. GAMBILL. We send out 8 million reports a year to consumers, and I said earlier, we have 4 million of them that ask us to reverify issues or questions that they may have on those reports. We spend $60 million on that process.

Mr. MEEKS. And have you ever explored on, would it save money if you sent out some notification et cetera, electronically?

Mr. GAMBILL. We send out as many as we can, electronically, Congressman. The issue becomes the rigor with which we need to authenticate somewhat electronically, but be sure that they are who they say they are. We don't want people to get credit reports that aren't theirs. So we have to be fairly rigorous in the questions that we will ask before we deliver the report electronically.

We are now up to a point, where about 70 percent of the people that try to get their report electronically are successful at it. That will ultimately, I think, drive our price and cost down. But currently, that is

Mr. MEEKS. As you move along and you begin to perfect it, that should help some cost down because, like my colleague from Oregon, I am concerned about identity theft, and I agree with also, Congressman Ackerman, who talked about when a person receives a negative credit information, it was hitting them, if the individual knows that a report is going to hit them immediately, number one, they can correct it, so that we don't have the of debt that was indicated by Ms. Hooley, where someone goes in for mortgage closing, or they go in for a job and they have a negative credit report, and then all of the sudden, they are hit with something they had no idea was there. And it takes time.

But if they had a notification at the time it had hit the report that they had a negative report, then that would help them and prevent identity theft, saving billions of dollars, I'm sure, because I know from the credit card company, that is one of the major prob

lems that they talk about, they are loosing all kinds of money. Is there anything that you can conceive or come up with that would make it logistically possible to have something where there is a hit and a consumer knows about it?

Mr. GAMBILL. Those kinds of things are certainly possible if they are electronic. And we offer those kind of services to consumers on a subscription basis that can go through the rigor of being authenticated electronically so that we can, via e-mail, give them some electronic notices as to when things change about their credit files. To wholesale mail, that kind of information out, I believe, would increase our exposure to fraud as a country, not decrease it, because I am sending information to some address about some individual, about some trade line, that hit some credit file, I have no real idea whether I have sent that to the right individual or not. Mr. MEEKS. I just want to check, because someone told me that at a speech somewhere is it correct, that you said .6 percent of your revenue would gain from selling the report to the public. Is that correct?

Mr. GAMBILL. Well, your math is better than mine; it is about $30 million. I mean I will calculate that percentage if you would like.

Mr. MEEKS. Okay. Let me ask a quick question of Mr. Moskowitz.

I asked that because Wells Fargo gets my money every month. [Laughter.]

Mr. MEEKS. Might as well make you

Mr. MOSKOWITZ. Mine too.

Mr. MEEKS. There is this huge concern about the crafting of privacy notices and legislation on privacy by various States. We have heard the testimony here. What would be your recommendations for a uniform national privacy law that would simplify the issues for customers without completely opening-and now is the big question-Gramm-Leach-Bliley? Is there any recommendation, you think? It took us such a long time to get there, you don't want to open the whole thing up. But do you have any recommendations? Mr. MOSKOWITZ. Well, we agree that the possibility of inconsistent State privacy disclosures will confuse people, and we believe that regulators should be asked by Congress to improve existing annual notices and establish uniform disclosure requirements that make it clear how information is used by a company.

We are strong supporters, though, as you know, of the ability of a company, like a bank, with its operating subs, to organize itself in the way that it wishes to and to be able to freely share information internally to accommodate the needs of customers without restriction, except that as provided by existing FCRA law.

Mr. PLUNKETT. Congressman, I might just add-Congressman, this is Travis Plunkett.

I might just add that, the privacy notices are already regulated nationally through the Gramm-Leach-Bliley Act. So we are not going to see that change. We think the notices need to be improved, but that is a national regulation right now.

The folks who want to extend the affiliate sharing preemption, one of the eight preemptions under the Fair Credit Reporting Act, your question was how do we do this without messing with

Gramm-Leach-Bliley. And unfortunately, the proponents of extension of the affiliate sharing preemption have brought GrammLeach-Bliley into play already because they have claimed that the prohibition on States passing affiliate sharing restrictions for credit reporting purposes extends beyond that and actually affects the Gramm-Leach-Bliley Act and doesn't allow the explicit provision in Gramm-Leach-Bliley that allows States to go further with privacy loss. It doesn't allow those States to deal with affiliate sharing.

So we already have a linkage that folks who want to extend this affiliate sharing preemption have made the Gramm-Leach-Bliley, so it is hard to deal with the affiliate-sharing problem, and we think it is a problem, without bringing Gramm-Leach-Bliley into play.

Mr. MOSKOWITZ. And we don't think there is an affiliate-sharing problem at all. We believe that the ability to share information for appropriate purposes within a company that has chosen to organize itself in separately organized corporations, which could be organized that way for both expertise reasons, for regulatory purposes and liability purposes, is a primary driver of the efficiency of the market that has lowered interest rates for consumers.

It has allowed companies like Wells Fargo to develop innovative products that have allowed us to become the primary lender, the number one lender to low-to moderate-income groups and in lowto moderate-income communities, and to ethnic minorities. And those efficiencies are undermined by our inability to share information internally in a way that addresses those communities' needs. Mr. PLUNKETT. And we have said we would simply like consumers to have the option to stop sharing of that information. And if they see an economic advantage, they will certainly allow it. Mr. MOSKOWITZ. And consumers have the ability to opt outMr. PLUNKETT. Not on affiliate sharing.

Mr. MOSKOWITZ. Yes, they do.

Mr. MEEKS. This is my last question, gentlemen, on affiliate sharing. Should the same be true of major corporations that provide completely different services, for example, commercial banking and investing banking?

Mr. MOSKOWITZ. The ability of a company that has unrelated business?

Mr. MEEKS. Yes.

Mr. MOSKOWITZ. Well, we believe that the most efficient way for a company with multiple businesses is to organize itself as the way it chooses to do so and to provide services to consumers in a way that is consistent with that organization, and not be forced to reorganize in a way that could accommodate that sharing and that is inconsistent with its own internal business model.

Mr. PLUNKETT. See, I don't think many consumers know about the affiliates of their bank, for instance. Many banks now have lots of affiliates. So the bank is also has an affiliate in the insurance business or the security business, I think, polls show again and again, consumers want the choice. They will consider the cost and the benefits, but they want choice to stop the sharing of that information between the bank affiliate, the insurance affiliate and the security affiliate.

Mr. MOSKOWITZ. And that choice could impact the ability of a company to control fraud, to manage its servicing portfolio and could be able to deliver its products to Wall Street in a way that reduces inefficiencies and increases cost.

Mr. MEEKS. Thank you. I yield back.

Chairman BACHUS. Thank you. I think that concludes our testimony of the first panel. I appreciate your testimony and commend you on your answers, and it has been very valuable to us as we consider this important matter.

First panel is discharged, and we will go right to our second panel at this time.

We want to welcome our second panel, from my left to right.

First panelist, Mike Vadala, president and CEO of Summit Federal Credit Union, located in Rochester, New York. Summit has $275 million in assets, 42,000 members from over 500 companies. Probably more importantly, he is the secretary of NAFCU. More importantly, I see you are active on the alumni board and the management advisory council of Syracuse University. I commend you on your NCAA basketball win, except for your victory over Auburn, which you got very lucky there.

[Laughter.]

Chairman BACHUS. But other than that, you probably deserved to win every game. And very active in various charities in the Rochester area. I welcome you back before the committee. I think you have testified, actually, in 1997 on credit cards and other different issues.

Our next panelist is Rusty Cloutier. He serves as a director of the New Orleans branch of the Federal Reserve Bank in Atlanta. President, CEO of MidSouth Bank, Lafayette, Louisiana, a bank of $365 million asset bank. Earned a Bachelor's in Science from Nichols State. Is that where Billy Tauzin went?

All right, so we know that is a very good institution.

He also served as a member of Fannie Mae's National Advisory Committee. Again, director of Our Lady of Lords Regional Medical Center, Chamber of Commerce and chairman of the Community Bank, Bankers of Louisiana. I welcome you to this hearing.

George Loban, co-chairman of FSF Financial Corporation and First Federal FSB, $560 million stock institution in Hutchinson, Minnesota.

Where is Hutchinson, Minnesota?

Mr. LOBAN. Hutchinson is just west of the Twin Cities, about 40 miles

Chairman BACHUS. I see.

Mr. CLOUTIER.40 or 50 miles, Minneapolis, St. Paul.

Chairman BACHUS. Then, a member of the board of directors of America Community Banks since 1998, serves on various committees for them. A chairman of the board of the Minnesota League of Savings and Community Banks, and served two terms as chairman and two terms as the member of the board of the Federal Home Loan Bank in Des Moines. So, welcome you and quite an experienced background.

Robert Manning is a Caroline Gannett Professor of Humanities, Rochester Institution of Technology, Rochester, New York. That is the same town that our first panelist is from, so we have two from