AIA Says Fair Credit Act Renewal Will Keep Regulatory Balance

The American Insurance Association (AIA) on Thursday urged Congress to renew the Fair Credit Reporting Act and applauded House Financial Services Committee Chairman Mike Oxley (R-Ohio) and Rep. Spencer Bachus (R-Ala.) for their wide-ranging hearing on the need to reauthorize the law.

“Chairman Oxley and Congressman Bachus should be commended for making sure the House Financial Services Committee explores key issues and consumer benefits of the current system as part of the legislative debate over the Fair Credit Reporting Act (FCRA),” said Leigh Ann Pusey, AIA senior vice president, federal affairs. “Insurers stand ready to work with Chairman Oxley, Congressman Bachus and their colleagues as they work toward reauthorizing FCRA by the end of the year.”

Bachus chairs the House Subcommittee on Financial Institutions, which held the second in a series of hearings Thursday on renewing FCRA.

Key provisions of FCRA expire on Dec. 31, unless Congress renews them. The FCRA provisions have reportedly helped create a smooth national credit reporting system, making it easier for consumers to get credit and protect themselves against fraud and identity theft.

“American consumers and the economy as a whole depend on a smooth credit framework. It is critical that Congress renew FCRA,” Pusey said. If the provisions expire, Pusey added, consumers could be subject to a patchwork of credit reporting laws that vary from state to state. That could put in jeopardy the national system that has helped millions of consumers get credit and insurance for important family purchases such as homes and autos.

“The Fair Credit Reporting Act strikes a fair, workable balance, allowing insurers access to important data so that they can offer their very best rates to customers, but still giving state authorities the ability to regulate how companies use that personal information,” Pusey noted.

Since FCRA was enacted, American households ranking in the bottom 20 percent according to income have increased their use of consumer credit by 70 percent, according to a recent study commissioned by the Financial Services Coordinating Council (FSCC). The study also found that the national credit system saved U.S. homeowners about $120 billion a year over European homeowners.