Bryce Covert calls for the entire credit bureau industry to be nationalized in an op-ed in the New York Times:
These private institutions hoover up our data, often without our knowledge and consent, and then sell it off to banks, landlords and even prospective employers. The companies rake in some $10 billion in revenue every year. They wield enormous power to ruin our lives — if not through a data breach, then through errors on our credit reports. One in four consumers has an error on his credit report that could affect his scores, yet it can be very difficult to correct the record.
Although they call themselves bureaus, there is nothing governmental about what these private companies do. We let them take on a role that can have outsize consequences. And the free market doesn’t work here, because none of us can refuse to be a part of this system and opt out if we don’t like how we’re being treated. There’s no legal right to ask Equifax to remove your data from its registries or to stop it from getting more in the future.
Why should we continue to allow private companies to make money from us while ignoring our needs? Let’s nationalize Equifax and the other two major credit reporting companies, Experian and TransUnion. We could follow other countries’ example and hand the duty of tracking our financial histories over to a public registry instead of a private profiteer.
I found Ms. Covert’s reasoning mostly incoherent. If revenue, influence on our lives, or a lack of accountability were justifications for nationalizing companies, it seems to me that Google, Facebook, and Apple would be prime candidates for nationalization. What large company wouldn’t satisfy the criteria Ms. Covert is applying?
I agree with her in one particular: I see no reason that we should subsidize the credit bureaus’ business model. There is a ready solution for that: strict liability. Under strict liability it wouldn’t be necessary to demonstrate wrongdoing, intentional harm, or recklessness for a lawsuit to succeed. All you’d need to do is be able to demonstrate injury.
In her zeal for expanding the role of government she does give us one thigh-slapper:
The United States government is, of course, not impervious to data breaches, nor does it have a perfect track record of fending them off. In 2015, it announced that hackers had stolen “sensitive information†on 21.5 million people. But the government is at least accountable to public pressure.
The civil bureaucracy is completely immune from public pressure and, as we have seen over the last eight months, is highly resistant to influence from elected officials. The surest way of making the problem intractable is to nationalize it.
The more you consider it the idea, the worse you realize it is. Credit bureaus’ primary customers are lenders. Any nationalization of credit bureaus would inevitably lead either to additional subsidies for banks, state capitalism at a level we’ve never seen it before, or both. Can anyone reasonably say “the problem with the United States is that we’re not subsidizing banks enough?”
I also see no way of enforcing a ban on collecting data. No, liability is the best recourse.
One more point: under U. S. law for the federal government to nationalize the credit bureaus it would need to pay for them. The market capitalization of the three large credit bureaus is around $30 billion. Talk about welfare for the rich!
I’d add it’s doubtful they’d actually be nationalized. More likely they’d end up as GSE’s.
Not that anything will happen though. Despite the credit ratings agencies culpability in the 2008 meltdown, they still enjoy substantial independence. Absent some catastrophe, Washington will do nothing about the consumer credit firms.
Our experience with GSE has been awful for the last several decades. Maybe it’s irrelevant but I think that when a typical corporate CEO made 14 times what the typical worker in his company made it was one think but now that so many corporate CEOs receive hundreds of times what the average worker in his or her company does it’s something else entirely. I suspect that paying the CEO of a GSE an amount equal to his or her presumed CEO peers is incompatible with good governance of those GSEs.
One more point: under U. S. law for the federal government to nationalize the credit bureaus it would need to pay for them.
I’ve been wondering the same with regard to the possibility of single payer healthcare. What would happen to the health insurance companies?
I don’t think it would constitute a taking in the way that nationalizing the credit bureaus would. Something depends on how a single-payer system is implemented. Does Germany have a single-payer system? If so, its system operates hand in hand with hundreds, thousands of insurance companies.
But wouldn’t that in effect be making them GSEs? I guess that’s my point- I don’t see how it solves anything because we’d just shift from a group of corporate bureaucracies to a government one, or a GSE.
In effect Obamacare did make them something like GSEs without labeling it such and IMO it’s a disaster.
I guess I’m feeling cranky because we just got the official confirmation that we’ll have to shop for a new plan again (every. single. year.) Humana (our carrier last year) and BCBS (our current carrier) will have both left the market in our state and this will likely be the year that we won’t be able to “keep our doctor” though we might and just self pay.
It’s hard for me to see how any program which makes life as complicated as the ACA does will ever be popular. That’s probably the best political argument for single-payer.
I see your point but that’s what makes me wonder how single payer would be better. It’s not as though they’d be starting from scratch, they’d cobble it together from the existing bureaucracies.
I doubt that it would be. It reminds me of the old wisecrack that if we had some ham we could make a ham and cheese sandwich if we had some cheese.
In the case of single-payer it’s more like if we had single-payer we could have a much simpler, streamlined, and efficient health care system if things were simple, streamlined, and efficient in the United States.