Government-run credit scoring scheme…


Another attempt by the racist progressive communist democrats to exert control over the financial future of Americans…

(1)  Credit is the lifeblood of a debt-driven economy where the promise to repay debts is of paramount importance.

(2)  The traditional 5C underwriting criteria

The five Cs of credit is a traditional system developed and used by lenders for centuries to assess the creditworthiness of potential borrowers. The system weighs five characteristics of the borrower and conditions of the loan, attempting to estimate the chance of default and, consequently, the risk of a financial loss for the lender.

The first C is character—the applicant's credit history.

The second C is capacity—the applicant's debt-to-income ratio and ability to repay the assumed debt obligation.

The third C is capital—the amount of money an applicant has.

The fourth C is collateral—an asset that can act as security for the loan.

The fifth C is conditions—the purpose of the loan, the amount involved, the economic climate, and prevailing interest rates.

(3)  The sixth 6th 'C' of credit–credit reporting purports to statistically analyze a limited set of current and historical credit-related factors to create a single “credit score” that reflects the likelihood of default.

The privately owned and operated system is not foolproof, relies on information collected from unaffiliated third parties, and disadvantages those without traditional loans, credit cards, and reported transactions. It is an 80-20 Pareto system that works for traditional individuals, not the poor or individuals who operate outside the margins of traditional financial life.

Government tyranny in the name of equity…

Legislation has been introduced in the House of Representatives that would eliminate or supplement the current big-three credit reporting agencies (Experian, Equifax, and TransUnion) to create a government scoring system that would promote “fairness and equity.” Of course, the progressive communist democrats cannot resist adding social elements to the scoring algorithm, much like the “social scores” that dominate life in Communist China, including travel, internet access, and the ability to purchase certain goods and services.

Spearheaded by the corrupt, racist, communist grifter, House Committee on Financial Services Chair Maxine Waters (D-CA), two Democrat-sponsored bills are circulating in the House. House Resolution H.R. 362, known as the “Comprehensive Credit Act of 2020,” and sponsored by the racist, anti-Semitic, anti-America, communist Ayanna Pressley (D-MA), and a draft copy of the “Protecting Your Credit Score Act of 2021” which would “amend the Fair Credit Reporting Act to ensure that consumer reporting agencies are providing fair and accurate information reporting in consumer reports, and for other purposes.” Of course, the gotcha is always contained in the implementation of legislation “for other purposes.”

Enter Waters, the House Committee on Financial Services, and select “witnesses” who almost always present a biased viewpoint on behalf of their ideological agenda and organizations…

Consider excerpts from the testimony of Chi Chi Wu (John Hopkins, Harvard Law), a staff attorney at the National Consumer Law Center, a progressive non-profit advocacy group funded by Soros, and the usual foundations.

Chairwoman Waters, Ranking Member McHenry, and Members of the Committee, thank you for inviting me to testify today regarding consumer credit reporting and the need for reform. I offer my testimony here on behalf of the low-income clients of the National Consumer Law Center.

[OCS: Does equity – equality of outcome – mean that poor people should be able to purchase goods and services they cannot afford, or does it mean that the government should subsidize such purchases?]

NCLC has long advocated for stronger laws and regulation to ensure accuracy and fairness in the U.S. credit reporting system and to reform the Big Three credit bureaus (Equifax, Experian and TransUnion), known as the nationwide consumer reporting agencies under the Fair Credit Reporting Act (FCRA) and colloquially as “credit bureaus.”

All of the problems and failures with our consumer credit reporting system stem from two fundamental facts:

1. Credit bureaus are entirely private companies that are publicly traded, which means their highest duty is to shareholder profit, not the public good or the American consumer.

[OCS: If they cease to provide value to their customer base, they will be forced to adapt or face disintermediation. Marxists abhor private property and private enterprise, especially that which is beyond their corrupt control.]

2. The paying clients of credit bureaus are not consumers, but the creditors and debt collectors who furnish or use the information contained in the credit bureaus’ databases.

[OCS: The clients of politicians are not their public constituency, but the special interest that funds their campaigns and provides off-the-books perks and privileges to their family, friends, and others who benefit the politician.]

The fact that these are private, profit-seeking companies explains why the credit bureaus are constantly expanding their products into uses, such as employment, insurance, and tenant screening, that ultimately harm Americans and contribute to the massive inequality in our nation. The fact that their customers are creditors and other users of information explains the unacceptable error rates and bias against consumers who complain about errors.

[OCS: The extent to which private companies use credit bureau data to screen individuals is nowhere to be found in the Constitution. It is already illegal to discriminate against protected classes in housing, employment, and financial products.]

These two factors are why it’s time for a new paradigm for credit reporting, a public credit registry. While public agencies are not perfect, at least they would not have profit-making as their top priority. They would be responsive to public pressure and government oversight. They could also be charged with developing credit scoring models to reduce the yawning racial and economic inequality in this country.

[OCS: Of course, the progressive communist democrats hate private property and private enterprise and want to seize the reins of power by building another government equity factory.

No government entity has maintained an adequate database indexed by name, address, and social security number.

Witness the $1.4 BILLION of government stimulus dollars sent to dead people.

Witness the massive impact of illegal aliens on the IRS, SSA, and Medicare databases with their phony names, addresses, and social security numbers. And let's not forget the massive security breach at the Office of Personnel Management. The private data (including security check information) on all past and present government employees wound up in Communist China.

Just what factors could be added to a credit score to reduce racial and economic inequality? Perhaps a race-based affirmative action multiplier or guaranteed score?]

Yada. Yada. Yada.

The progressive communist democrats substitute narratives for the facts, cherry-picking a heart-tugging story to illustrate their corrupt point…

To illustrate the impact of COVID on consumer credit, Maxine Waters shared a story:

Last week, I received a letter from a gentleman in Ohio. In this letter, he explained how he had lost his job because of the pandemic. Without his salary, and with no help from any of his creditors, he couldn’t afford to cover all of his bills. Though he had never before missed a credit card payment, his credit score has suffered so badly, he wrote – and I quote – 'I couldn’t get credit now if I paid someone to give me credit.'. He closed his letter by asking what this Committee was doing to protect consumers like him.

OK, what is the solution, since any credit agency will report late or missed payments? How should the government “protect him?” Ignore the bad data, give him an artificially high score that disadvantages a lender who is likely to suffer a default loss? Instead of relying on his own devices to work his way out of the problem, why is he asking some government committee to take action? Could he be a collectivist looking for the government “nanny state” to protect him from life?

Bottom line…

It may not be perfect, but our current credit system appears to be working for the majority of Americans – leave it alone. Sound familiar? It’s the same story with Obamacare, and look how that turned out.

We are so screwed.

-- steve

“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

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