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Thread: Regulator targets credit reporting firms and debt collectors

  1. #1
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    Regulator targets credit reporting firms and debt collectors

    Regulator targets credit reporting firms and debt collectors - latimes.com

    Reporting from Washington—
    The government's newest regulator is ready to crack down on the nation's large credit reporting and debt collection companies, proposing tough new oversight on two arcane financial groups that affect nearly all consumers.

    The Consumer Financial Protection Bureau proposed to subject the companies to federal oversight for the first time as part of its broad authority to regulate firms outside the banking system.

    By sending examiners to review their operations on a regular basis, the bureau hopes to spot problems before they arise at companies that book-end the consumer financial experience — firms that help determine who gets credit in the first place and those that pursue people unable to pay their bills.

    "Debt collectors and credit reporting agencies have gone unsupervised by the federal government for too long," Richard Cordray, the bureau's director, said Thursday in announcing the effort.
    All I can say is "its about damn time".
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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    Quote Originally Posted by daewoo View Post
    I wouldn't be so excited. Banks and other finance industry areas have been regulated for a long time and it appears that was just code for "insider information gatherer"

    In in accounting we tried to regulate the auditors after Enron and that created the PCAOB which is basically a government sponsored luxury Big 4 Partner retirement program.

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    Quote Originally Posted by Steeeeve View Post
    I wouldn't be so excited. Banks and other finance industry areas have been regulated for a long time and it appears that was just code for "insider information gatherer"

    In in accounting we tried to regulate the auditors after Enron and that created the PCAOB which is basically a government sponsored luxury Big 4 Partner retirement program.
    I can certainly see your point...HOWEVER...at the same time it is ludicrous that credit reporting is carried out by entirely unregulated entities using rules that pretty much provide no consumer protection whatsoever.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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    Quote Originally Posted by daewoo View Post
    I can certainly see your point...HOWEVER...at the same time it is ludicrous that credit reporting is carried out by entirely unregulated entities using rules that pretty much provide no consumer protection whatsoever.
    I'm not exactly sure how you fix the banking system. People have too much invested in keeping up a lie. With assigning a credit rating you pay to have it look less risky no matter what the risk actually is. This is similar to how audit opinions work. Anyone that invests in the risky asset doesn't want the truth to be found out until they are no longer and investor. Thus we have a system where the last one at the table pays the check.

    All I can think is that we put in place a system where people close to a community are doing the risk assessment on assets sold locally...if that goes belly up, they know where you live. Basically extreme decentralization.

    Any other ideas?

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    Quote Originally Posted by Steeeeve View Post
    I'm not exactly sure how you fix the banking system. People have too much invested in keeping up a lie. With assigning a credit rating you pay to have it look less risky no matter what the risk actually is. This is similar to how audit opinions work. Anyone that invests in the risky asset doesn't want the truth to be found out until they are no longer and investor. Thus we have a system where the last one at the table pays the check.

    All I can think is that we put in place a system where people close to a community are doing the risk assessment on assets sold locally...if that goes belly up, they know where you live. Basically extreme decentralization.

    Any other ideas?
    I have actually been thinking about this a lot lately. I know some people would argue that the system should be completely deregulated and rely on market forces. That is a foolish position to take because unless you are talking about a barter economy, your entire economy is nothing but a stack of regulations. You cant give banks the power to create fiat money...money that only exists due to regulation, then deregulate the banks.

    I think a big part of the problem is finding a balance between the needs of the people and the profit motives of the banks. Then we need some kind of approval system for when the bankers come up with new and exciting ways to make money, so we can look at them BEFORE they crash the economy (SIVs anyone?). We need our regulators to get out in front instead of always being reactionary.

    As far as consumer credit reports, I think that is certainly ripe for regulation. Your credit score can make or break you, and it is based on a secret formula that you are not allowed to know, held in the files of private companies with NO incentive to ensure the information that have is accurate. The entire thing is stacked against the consumer.

    I had a ding on my credit report from some sleazeball debt collection attorney. The thing is, the debt in question, we had been to court over and I won...big time. When I got the notice from the sleazeball collections attorney I lawyered up and sued the guy who was trying to collect. He hired an actual attorney, we went to court (federal court no less) and I stomped him.

    The sleazy debt collection attorney had reported the debt equifax and never removed it.

    I was borrowing some money, and the guy at the bank told me I had an unpaid collection. Luckily it was a bank I have dealt with for years so it was not an issue, just a "did you know".

    He gave me a copy of the credit report and I called the sleazy debt collection attorney. He said that he had been removed from the case, but that the information on the credit report was accurate when he submitted it and he was under no obligation to spend his time removing it. He implied rather strongly that I could pay him to remove it. This angered me and I resolved that there was no possibility I was paying that jerkwad anything.

    I called the bank and explained to the loan officer there what was going on and asked how I should deal with it. He told me it was not a big deal (the loan had already been made) but if I just wanted it off I could forward the final order from the lawsuit to him and he could call the credit reporting agency and get it taken care of...no problem.

    He called back 2 days later and said they would not fix it because the final order from the federal court did not specifically reference the collection by the scumbag debt collection guy. He suggested that if I really cared about it/wanted it off that I talk to an attorney.

    I talked to my attorney who contacted the credit agency and he could not get it resolved. He was mystified...here I was with a federal court order finding that I did not owe the guy anything and the folks at equifax would not remove the damn thing from my credit report. They said that the sleazeball would have to do it.

    He contacted the sleazeball who basically said that he was under no obligation to do any more "work" on the case, and would only remove it if paid $2500 to do so. As I said before, I had already resolved that I was not paying that scum bag one dime, so my counter offer was that I would put $25,000 toward making his life a living hell and he would spend the next 15 years of his life defending himself against lawsuits, ethics inquiries, and smear campaigns.

    He removed it from my credit report.

    NONE of that should have ever happened. BUT...with the unregulated nature of consumer credit reporting, it has set up a situation where they use the credit reporting itself as a form of debt collection. In a lot of cases it basically adds severe negative consequences for disputing a debt or a bill.

    You will notice that businesses dont hold themselves to those same standards. OF COURSE NOT. We know it is a LOT easier to dispute a bill if we have not already paid the other party.

    As far as the rest of the banking industry goes, I am not sure what we need to do. Extreme decentralization certainly makes sense, and I think we need to break up the mega banks. There are a million good arguments for doing so (and I am sure you are aware of all of them) and very few arguments for NOT doing so...and most of them boil down to what is or is not "fair", when in fact whining about "fairness" in a system that is essentially a regulatory fiction is foolishness at its best.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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