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U.S. senators ask consumer watchdog head for details on Equifax probe

151 points by rectang 9y ago

rectang 9y ago
Was it inevitable that the Equifax situation became partisan? I'm a market constructivist, and I'd prefer the simplest possible solution which regulates Equifax and its immense externalities out of existence. But isn't there also a libertarian case to be made that the credit authorities are a cartel and should be deregulated out of existence? And if that's the case, can't at least some of us find common ground?
- maxxxxx 9y ago
  The libertarians I know would probably say that it's the government's fault that this situation arose. I don't think they would have an answer how to deal with the current situation.
  - rectang 9y ago
    If they think it's the government's fault, that's not necessarily a barrier to agreement on a course of action. If there's a law that can pass that libertarians can call "deregulation" I could potentially get behind it so long as it has the desired effect. For instance, it's my understanding that laws exist which protect the big three credit authorities. What are those laws, and what the prospects for changing them?
    - maxxxxx 9y ago
      Don't expect anything. Libertarians have no real answer for health care and they have no real answer for dealing with the credit agencies.
      - ikiris 9y ago
        Yes they do, you just don't like that the answer is let them die.
        rectang 9y ago
        I love the answer of letting them die. The negative externalities of the big three CRAs exceed value they provide and if the market could respond to those externalities, they would go under. However, would whatever replaces the big three exhibit the same negative externalities and recreate the same situation of market failure?
        8note 9y ago
        I think the more apt comparison to letting people die if they can afford healthcare is for Equifax to make all their data public, and you can pay Equifax a couple thousand a month to make data about you private.
        rectang 9y ago
        Meh, I misunderstood who "let them die" refer to -- I thought it was the CRAs, not people. :\ I still feel like your analogy doesn't adequately capture the negative externality in the identity theft that the CRAs enable. In a healthy marketplace, the cost of that identity theft would be borne by the people who profit from it, not innocent third parties. How do we get to a marketplace where that crushing cost falls upon the deserving party, dissuading them from their destructive course? We need to acknowledge that the quantitative change in the accessibility of personal credit information amounts to a qualitative change, justifying a rethink about who owns it.
        ams6110 9y ago
        > Meh, I misunderstood who "let them die" refer to -- I thought it was the CRAs not people. No, you understood correctly the first time.
        9y ago
- sp332 9y ago
  No, the Equifax breach hurt tons of constituents on both sides of the aisle. The parties had every reason to come together on this. Especially the Republicans, because the lack of trust will be bad for business. But it seems the ones elected at the moment are beholden to specific donors and not accountable to the people they're supposed to represent. I'm not clear on how deregulation would hurt Equifax and the other reporting agencies? It seems that enforcing regulations would hurt them in this case.
  - rectang 9y ago
    I realize this isn't immediately realistic, but please brainstorm with me: 1. Change privacy laws so that consumers own their own data. (Something like Germany's BDSG?) 2. Repeal the Fair Credit Reporting Act. The idea is that once consumers have the weapons and wherewithal to sue irresponsible credit rating authorities out of existence, perhaps fewer "regulations" will be needed.
    - sp332 9y ago
      Equifax already has 23 class-action lawsuits pending. But it would be better for consumers if a breach of this type were a crime investigated by the government, so individuals don't have to proactively go to court themselves. By default, incumbents and big players have the advantage in the market, so without regulation I doubt anyone could unseat the Big Three agencies. They can afford to have a some inaccuracies and even a breach here and there and still be hard to beat. Remember the people whose data they lost are not their customers. Using the government to force companies to protect that data could level the playing field and increase competition. As for 1. that is of course regulation.
  - mulmen 9y ago
    You seem to have conflated the concepts of representation and protection. Congress represents constituents, it does not protect them. If constituents do not demand action here congress will not pursue further action. The CFPB is supposed to be protecting consumers, not congress.
    - 9y ago
- guelo 9y ago
  I feel like it is inevitable because the current crop of right wing politicians are hard core ideologues. Pragmatism is not in their vocabulary.
  - cat199 9y ago
    absolutely, uuuge contrast to the fair, non-partisan and balanced pragmatism of say, HRC, Feinstein, etc.
    - arca_vorago 9y ago
      People just need to realize the corruption is bipartisan. This tribalism bullshit is going to eat us from the inside out. I swore an oath to the constitution, not to a fucking party, so stop trying to tell me your tribe is better, it isn't, and fuck off with the bullshit claims of "but false equivalence"! The people downvoting you just don't that like you flipped the exact statement of the gp. You are both right.
- djrogers 9y ago
  > Was it inevitable that the Equifax situation became partisan? I'm not so sure it's the Equifax situation here, but rather the CFPB that's the target of partisan lashings. The CFPB has been criticized by both the left and right at various times for overspending, lack of oversight, lack of results, and especially it's fundamental structure - in fact it was even ruled unconstitutional by a DC circuit court. The ruling has since been upheld in an en-banc hearing. Some of the comments from the judge in the initial ruling are rather surprising: "The Director enjoys significantly more unilateral power than any single member of any other independent agency. By “unilateral power,” we mean power that is not checked by the President or by other colleagues. Indeed, other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power." [1]https://www.theatlantic.com/business/archive/2016/10/court-rules-consumer-financial-protection-bureaus-structure-is-unconstitutional/503660/ https://www.theatlantic.com/business/archive/2016/10/court-r... [2]https://www.cadc.uscourts.gov/internet/opinions.nsf/B7623651686D60D585258226005405AC/$file/15-1177.pdf https://www.cadc.uscourts.gov/internet/opinions.nsf/B7623651...
  - creeble 9y ago
    Someone needs to pull rank and take over or start an investigation outside of the CFPB. They clearly aren’t doing their job, and now it has become stupid to simply ask them to start doing it.
    - tonyztan 9y ago
      The CFPB was doing its job until Director Cordray resigned and Trump appointed Mulvaney to be Acting Director. There is even a pending lawsuit about it: https://www.usatoday.com/story/news/politics/2017/11/28/judge-rules-mick-mulvaney-remain-interim-headin-leadership-fight-consumer-financial-protection-burea/902173001/ https://www.usatoday.com/story/news/politics/2017/11/28/judg...
tptacek 9y ago
"US senators" here referring to most of the minority party, and none of the majority party, meaning nothing is likely to come of this until after 2018.
- protomyth 9y ago
  The letter, which was dated Feb. 7, was led by Hawaii's Democratic Senator Brian Schatz and signed by 29 Democrats, including all those on the Senate Banking Committee, and two independents. per Reuters, but no actual letter text.
  - dragonwriter 9y ago
    Source press release, including text of the letter and list of signatories: https://www.schatz.senate.gov/press-releases/schatz-leads-group-of-31-senators-in-demanding-answers-on-reports-of-cfpbs-stalled-investigation-into-equifax-breach https://www.schatz.senate.gov/press-releases/schatz-leads-gr...
  - tptacek 9y ago
    Right, but the two I's caucus with the Democrats. There's an argument to be made that the Democrats (who I'm a stalwart supporter of) have happily polarized this issue, rather than doing something more quiet while collecting bipartisan support. That what they're doing looks helpful but really isn't.
    - protomyth 9y ago
      Well, yeah. In the 90's or early 00's, it would have been both parties with a joint press conference. Now we have 24 hour news and don't need cooperation to get press. At this point working with the other party is just not done. The congressional leadership of both parties has set a course and its going to be this way for a while. In some ways, its just a shift from incumbent protection to trying to gain back seats. Equifax is pretty far down the list politically anyway, so it probably didn't actually do any harm, but it certainly didn't do any good either. I find it amusing that the polling that has failed for multiple years is being seen as valid this time around.
linsomniac 9y ago
A previous HN discussion, possibly on Equifax now that I think about it, had a comment recommending the book "The Chickenshit Club", about why the justice department doesn't prosecute. I just finished in it a discussion of Enron and their auditors, Arthur Andersen. The justice department prosecuted Andersen (one of the "big 5" accounting firms at the time), and there was a lot of backlash about the Justice Dept "killing Andersen". The details of it are that Enron was way crooked, lying to investors and the public saying everything was great, when it wasn't. Andersen audits didn't reveal this, and also was responsible for increasing document shredding from 80lbs/day to >2,000lbs/day in the few days before the SEC subpoena. And this was after Andersen had been shown to be negligent in the auditing of Worldcom, QWest, and Globalcom. Basically, they recommended fraudulent practices with WorldCom, got caught and said "We promise we will never do that again" and did it again with Enron. Justice Dept prosecuted, and then there was all this backlash about the prosecution. So, is prosecution of Equifax likely? Seems like we as a country have trained the government not to.
- creaghpatr 9y ago
  Second the recommendation for Chickenshit Club (also helps interpret the speed and proceedings of other DOJ cases in play). Equifax is largely embedded in our business/credit infrastructure and there would be collateral consequences for all of the businesses who would have to change as a result of their punishment/demise. This in no way absolves them from responsibility but DOJ pragmatism towards corporations is they way it goes, for now. If AWS (for example) experienced some significant breach, would the DOJ and/or the public want them punished out of existence? Execs go to jail vs. large corporate fine? Should punitive damages go towards patching the breach or refunding customers? It's a delicate balance and I'm personally undecided on how to scope the fix, even after reading Chickenshit Club.
  - cat199 9y ago
    1775 USA: If we don't like the king, we shouldn't get rid of the monarchy - think of the impacts to the wider society! 2018 USA: If we don't like the executive, we shouldn't get rid of foocorp - think of the impacts to the wider society! systemic/structural answers to specific problems are rarely the solution, but they sure do help you avoid the cost of dealing with the specific problem..
f1mint 9y ago
http://www.f1mint.com/computer-hardware http://www.f1mint.com/computer-hardware
tomohawk 9y ago
Equifax is bad, but the CFPB is much worse. Its rules and actions are immune to oversight by any other body, including Congress and the Judiciary. It draws funding directly from the Federal Reserve instead of being funded by Congress. https://www.forbes.com/sites/norbertmichel/2017/01/24/the-cfpb-is-in-the-crosshairs-exactly-where-it-belongs/#277dedfc1a4f https://www.forbes.com/sites/norbertmichel/2017/01/24/the-cf...

151 points by rectang 9y ago

Was it inevitable that the Equifax situation became partisan? I'm a market constructivist, and I'd prefer the simplest possible solution which regulates Equifax and its immense externalities out of existence. But isn't there also a libertarian case to be made that the credit authorities are a cartel and should be deregulated out of existence? And if that's the case, can't at least some of us find common ground?

maxxxxx 9y ago
The libertarians I know would probably say that it's the government's fault that this situation arose. I don't think they would have an answer how to deal with the current situation.
- rectang 9y ago
  If they think it's the government's fault, that's not necessarily a barrier to agreement on a course of action. If there's a law that can pass that libertarians can call "deregulation" I could potentially get behind it so long as it has the desired effect. For instance, it's my understanding that laws exist which protect the big three credit authorities. What are those laws, and what the prospects for changing them?
  - maxxxxx 9y ago
    Don't expect anything. Libertarians have no real answer for health care and they have no real answer for dealing with the credit agencies.
    - ikiris 9y ago
      Yes they do, you just don't like that the answer is let them die.
      - rectang 9y ago
        I love the answer of letting them die. The negative externalities of the big three CRAs exceed value they provide and if the market could respond to those externalities, they would go under. However, would whatever replaces the big three exhibit the same negative externalities and recreate the same situation of market failure?
        8note 9y ago
        I think the more apt comparison to letting people die if they can afford healthcare is for Equifax to make all their data public, and you can pay Equifax a couple thousand a month to make data about you private.
        rectang 9y ago
        Meh, I misunderstood who "let them die" refer to -- I thought it was the CRAs, not people. :\ I still feel like your analogy doesn't adequately capture the negative externality in the identity theft that the CRAs enable. In a healthy marketplace, the cost of that identity theft would be borne by the people who profit from it, not innocent third parties. How do we get to a marketplace where that crushing cost falls upon the deserving party, dissuading them from their destructive course? We need to acknowledge that the quantitative change in the accessibility of personal credit information amounts to a qualitative change, justifying a rethink about who owns it.
        ams6110 9y ago
        > Meh, I misunderstood who "let them die" refer to -- I thought it was the CRAs not people. No, you understood correctly the first time.
      - 9y ago
sp332 9y ago
No, the Equifax breach hurt tons of constituents on both sides of the aisle. The parties had every reason to come together on this. Especially the Republicans, because the lack of trust will be bad for business. But it seems the ones elected at the moment are beholden to specific donors and not accountable to the people they're supposed to represent. I'm not clear on how deregulation would hurt Equifax and the other reporting agencies? It seems that enforcing regulations would hurt them in this case.
- rectang 9y ago
  I realize this isn't immediately realistic, but please brainstorm with me: 1. Change privacy laws so that consumers own their own data. (Something like Germany's BDSG?) 2. Repeal the Fair Credit Reporting Act. The idea is that once consumers have the weapons and wherewithal to sue irresponsible credit rating authorities out of existence, perhaps fewer "regulations" will be needed.
  - sp332 9y ago
    Equifax already has 23 class-action lawsuits pending. But it would be better for consumers if a breach of this type were a crime investigated by the government, so individuals don't have to proactively go to court themselves. By default, incumbents and big players have the advantage in the market, so without regulation I doubt anyone could unseat the Big Three agencies. They can afford to have a some inaccuracies and even a breach here and there and still be hard to beat. Remember the people whose data they lost are not their customers. Using the government to force companies to protect that data could level the playing field and increase competition. As for 1. that is of course regulation.
- mulmen 9y ago
  You seem to have conflated the concepts of representation and protection. Congress represents constituents, it does not protect them. If constituents do not demand action here congress will not pursue further action. The CFPB is supposed to be protecting consumers, not congress.
  - 9y ago
guelo 9y ago
I feel like it is inevitable because the current crop of right wing politicians are hard core ideologues. Pragmatism is not in their vocabulary.
- cat199 9y ago
  absolutely, uuuge contrast to the fair, non-partisan and balanced pragmatism of say, HRC, Feinstein, etc.
  - arca_vorago 9y ago
    People just need to realize the corruption is bipartisan. This tribalism bullshit is going to eat us from the inside out. I swore an oath to the constitution, not to a fucking party, so stop trying to tell me your tribe is better, it isn't, and fuck off with the bullshit claims of "but false equivalence"! The people downvoting you just don't that like you flipped the exact statement of the gp. You are both right.
djrogers 9y ago
> Was it inevitable that the Equifax situation became partisan? I'm not so sure it's the Equifax situation here, but rather the CFPB that's the target of partisan lashings. The CFPB has been criticized by both the left and right at various times for overspending, lack of oversight, lack of results, and especially it's fundamental structure - in fact it was even ruled unconstitutional by a DC circuit court. The ruling has since been upheld in an en-banc hearing. Some of the comments from the judge in the initial ruling are rather surprising: "The Director enjoys significantly more unilateral power than any single member of any other independent agency. By “unilateral power,” we mean power that is not checked by the President or by other colleagues. Indeed, other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power." [1]https://www.theatlantic.com/business/archive/2016/10/court-rules-consumer-financial-protection-bureaus-structure-is-unconstitutional/503660/ https://www.theatlantic.com/business/archive/2016/10/court-r... [2]https://www.cadc.uscourts.gov/internet/opinions.nsf/B7623651686D60D585258226005405AC/$file/15-1177.pdf https://www.cadc.uscourts.gov/internet/opinions.nsf/B7623651...
- creeble 9y ago
  Someone needs to pull rank and take over or start an investigation outside of the CFPB. They clearly aren’t doing their job, and now it has become stupid to simply ask them to start doing it.
  - tonyztan 9y ago
    The CFPB was doing its job until Director Cordray resigned and Trump appointed Mulvaney to be Acting Director. There is even a pending lawsuit about it: https://www.usatoday.com/story/news/politics/2017/11/28/judge-rules-mick-mulvaney-remain-interim-headin-leadership-fight-consumer-financial-protection-burea/902173001/ https://www.usatoday.com/story/news/politics/2017/11/28/judg...

tptacek 9y ago

"US senators" here referring to most of the minority party, and none of the majority party, meaning nothing is likely to come of this until after 2018.

protomyth 9y ago
The letter, which was dated Feb. 7, was led by Hawaii's Democratic Senator Brian Schatz and signed by 29 Democrats, including all those on the Senate Banking Committee, and two independents. per Reuters, but no actual letter text.
- dragonwriter 9y ago
  Source press release, including text of the letter and list of signatories: https://www.schatz.senate.gov/press-releases/schatz-leads-group-of-31-senators-in-demanding-answers-on-reports-of-cfpbs-stalled-investigation-into-equifax-breach https://www.schatz.senate.gov/press-releases/schatz-leads-gr...
- tptacek 9y ago
  Right, but the two I's caucus with the Democrats. There's an argument to be made that the Democrats (who I'm a stalwart supporter of) have happily polarized this issue, rather than doing something more quiet while collecting bipartisan support. That what they're doing looks helpful but really isn't.
  - protomyth 9y ago
    Well, yeah. In the 90's or early 00's, it would have been both parties with a joint press conference. Now we have 24 hour news and don't need cooperation to get press. At this point working with the other party is just not done. The congressional leadership of both parties has set a course and its going to be this way for a while. In some ways, its just a shift from incumbent protection to trying to gain back seats. Equifax is pretty far down the list politically anyway, so it probably didn't actually do any harm, but it certainly didn't do any good either. I find it amusing that the polling that has failed for multiple years is being seen as valid this time around.

linsomniac 9y ago

A previous HN discussion, possibly on Equifax now that I think about it, had a comment recommending the book "The Chickenshit Club", about why the justice department doesn't prosecute. I just finished in it a discussion of Enron and their auditors, Arthur Andersen. The justice department prosecuted Andersen (one of the "big 5" accounting firms at the time), and there was a lot of backlash about the Justice Dept "killing Andersen". The details of it are that Enron was way crooked, lying to investors and the public saying everything was great, when it wasn't. Andersen audits didn't reveal this, and also was responsible for increasing document shredding from 80lbs/day to >2,000lbs/day in the few days before the SEC subpoena. And this was after Andersen had been shown to be negligent in the auditing of Worldcom, QWest, and Globalcom. Basically, they recommended fraudulent practices with WorldCom, got caught and said "We promise we will never do that again" and did it again with Enron. Justice Dept prosecuted, and then there was all this backlash about the prosecution. So, is prosecution of Equifax likely? Seems like we as a country have trained the government not to.

creaghpatr 9y ago
Second the recommendation for Chickenshit Club (also helps interpret the speed and proceedings of other DOJ cases in play). Equifax is largely embedded in our business/credit infrastructure and there would be collateral consequences for all of the businesses who would have to change as a result of their punishment/demise. This in no way absolves them from responsibility but DOJ pragmatism towards corporations is they way it goes, for now. If AWS (for example) experienced some significant breach, would the DOJ and/or the public want them punished out of existence? Execs go to jail vs. large corporate fine? Should punitive damages go towards patching the breach or refunding customers? It's a delicate balance and I'm personally undecided on how to scope the fix, even after reading Chickenshit Club.
- cat199 9y ago
  1775 USA: If we don't like the king, we shouldn't get rid of the monarchy - think of the impacts to the wider society! 2018 USA: If we don't like the executive, we shouldn't get rid of foocorp - think of the impacts to the wider society! systemic/structural answers to specific problems are rarely the solution, but they sure do help you avoid the cost of dealing with the specific problem..

f1mint 9y ago

http://www.f1mint.com/computer-hardware http://www.f1mint.com/computer-hardware

tomohawk 9y ago

Equifax is bad, but the CFPB is much worse. Its rules and actions are immune to oversight by any other body, including Congress and the Judiciary. It draws funding directly from the Federal Reserve instead of being funded by Congress. https://www.forbes.com/sites/norbertmichel/2017/01/24/the-cfpb-is-in-the-crosshairs-exactly-where-it-belongs/#277dedfc1a4f https://www.forbes.com/sites/norbertmichel/2017/01/24/the-cf...