I think that Amar Bhidé is whistling past a graveyard in his op-ed in the Wall Street Journal. In it he blames the rise of Equifax and other credit-scoring companies on fair lending laws:
Outrage that Equifax exposed more than 143 million credit records to identity thieves misses the point. We really should worry about what makes impersonation so easy—why do lenders know so little about the people to whom they issue credit?
Because laws meant to ensure fair lending also reduce individuals to anonymous credit scores. Regulators enforcing the 1968 Fair Housing Act and the 1974 Equal Credit Opportunity Act look askance at lenders who rely on judgment instead of scores to screen loan applications.
Even broadly relying on statistical scores doesn’t get lenders off the hook. Regulators also frown on “discretionary overrides,†especially if lenders allow frontline staff to overrule scores instead of having someone at headquarters do it. A branch-based banker in direct contact with customers may be better positioned to determine whether an applicant’s score reflects true creditworthiness. But regulators worry that giving branch staffers this authority may invite discrimination, so it’s a no-no.
Federal fairness examiners also worry about “customized†scoring models that can include variables excluded from credit-bureau records, such as education. It isn’t entirely forbidden, but regulators worry those variables could correlate with factors like race, ethnicity and sex. Lenders often resort to using a “generic†bureau score, popularly called a FICO score, to mitigate regulatory risk.
Everything in our civilization is pushing towards reducing people to numbers. Whether you can buy a house or a car, whether you get that job, whether you get into that school, and, consequently, how much you earn and where and how you live are all governed by numbers. It won’t be reversed.
The drawing at the top of this post is the minor Peanuts character 555 95472. Welcome, fellow numbers!
Equifax was a giant credit bureau doing pretty much the same thing as now before either of those Acts were passed. It was deregulation allowing banks to sell the loans they make that depersonalized lending.
My point is that the depersonalization will continue regardless of the laws. Too many people, institutions that are too large, the need for plausible deniability, mystical belief in the power of numbers, the list goes on.