6 ms·

Privatized credit rating agencies are so outdated and barbaric. Feds should nationalize them into a single public service run without profit.

by cwkoss 4y ago

nerdponx 4y ago
I'm tempted to agree. It might even be self-funding once you consider the revenue that a credit rating agency brings in.
- judge2020 4y ago
  These are credit reporting agencies, not credit rating agencies. Credit rating agencies are primarily for directly assessing a credit report for the likelihood of the debtor to either pay back, or default, on a loan. On the other hand, the 3 credit reporting agencies (Experian, Equifax, TransUnion) work by simply gathering credit information, and using industry standard (and usually shared[0]) scoring models to assign a FICO or Vantage score to individuals, after which the lender can use any of their own classification criteria to deny credit or assign an interest rate. 0: https://docs.google.com/spreadsheets/d/1sI6l_Z5SyJqx4xXwlLYLaXOmP_R3i6XtnBYPYVDOlrg/edit?usp=sharing https://docs.google.com/spreadsheets/d/1sI6l_Z5SyJqx4xXwlLYL...
  - phonon 4y ago
    Who do you think owns VantageScore? https://vantagescore.com/company/about-vantagescore/ https://vantagescore.com/company/about-vantagescore/
    - judge2020 4y ago
      The point is that it's standard. Credit rating agencies have their own formulas and risk assessment profiles, and typically assess a debtor's ability to pay back a debt in aggregate with other debtors. When companies are shuffling around and selling debt on the backend, they ask a credit rating agency to assess the debt, since a FICO/Vantage score isn't a full picture on how likely a debtor is to pay back a loan. The only difference between the 3 credit reporting agencies are how good their contracts are with lenders in terms of aggregating the most accurate and up-to-date data.
      - nerdponx 4y ago
        When you say "credit rating", are you talking about companies like Moody's? Or is there yet another layer of companies processing individual consumers' data behind the scenes? I definitely meant to write "credit reporting" in my original comment, but I never considered how credit rating and credit reporting companies might interact. Glad I made that mistake because I learned something from your comments.
        judge2020 4y ago
        Yes, Moody's and the like that caused the 2008 financial crisis. It was indeed a mostly pedantic point, but even the OP there (cwkoss) said 'rating' when they meant 'reporting' since it wouldn't be hard for the government to run a data aggregation platform with a few backends dedicated to calculating FICO or Vantage scores. (Technically the Government already backs the entire credit rating agency and their loan ratings, since they gave out billions in bailout money in the 2008 crisis :P)
nceqs3 4y ago
If you think Equifax had bad cybersecurity, imagine a government run one.
- Eisenstein 4y ago
  Do you think the NSA is bad at Cybersecurity? If so, what makes you think so? If not, do you think the NSA is a private entity?
  - DontchaKnowit 4y ago
    Do you think the government is going to bring NSA level security to the table? Probably not. And need I remind you that the NSA had millions of sensitive recirds stolen by a single IT tech? So no, actually, the NSA's security apparently isn't that great
    - Eisenstein 4y ago
      > Do you think the government is going to bring NSA level security to the table? Probably not. The argument I was opposing is 'the government can't do anything right compared to the private sector', not 'we need an NSA apparatus to secure our credit scores'. > And need I remind you that the NSA had millions of sensitive recirds stolen by a single IT tech? Which private company is immune to whistleblowers?
    - infinitezest 4y ago
      > And need I remind you that the NSA had millions of sensitive recirds stolen by a single IT tech? Are you talking about the contractor? Who worked for a private business?
- seadan83 4y ago
  Not everything government run is automatically worse. For a private company that is seemingly immune to bad PR over repeated full data breaches, security and security by design are costs. There are many private firms that should have an army of IT sec-ops, but instead have zero or close to it. Meanwhile, government IT tends to be the bottom of the barrel. Though, many government contracted sites are just fine. Overall, the incentives are not quite aligned for security and a company that does not have to care.
r3trohack3r 4y ago
Lifting this from a sibling. I’m not sure I 100% trust my government to decide what services I’m eligible for. I’d worry it would merge with the surveillance and police states. Imagine your cellphone pinging a tower during a protest and losing your ability to open a line of credit.
- bluefirebrand 4y ago
  This sort of thing actually did happen not long ago in Canada, too. Agree or disagree with the trucker protest, it's pretty messed up the government invoked emergency powers to freeze people's bank accounts over it. It's definitely too much power for the government to have.
- Broken_Hippo 4y ago
  Instead, you get companies that aren't penalized for fixing mistakes, even though they negatively affect you. The companies aren't technically deciding what services you are eligible for, and neither would the government - but they do give information to people that do. And they use a secret formula to do it. I don't know why you think that the government would do this with credit reports. I mean, all they have to do is pass laws to govern banking and declare that they need to not give folks with "bad credit" loans.
  - thfuran 4y ago
    Requiring an act of Congress is a far higher standard then requiring an unannounced policy change from some agency.
  - r3trohack3r 4y ago
    > And they use a secret formula to do it. I don't know why you think that the government would do this Last time I checked, the no-fly list is not publicly shared.

Privatized credit rating agencies are so outdated and barbaric. Feds should nationalize them into a single public service run without profit.

by cwkoss 4y ago

Privatized credit rating agencies are so outdated and barbaric. Feds should nationalize them into a single public service run without profit.

nerdponx 4y ago

I'm tempted to agree. It might even be self-funding once you consider the revenue that a credit rating agency brings in.

judge2020 4y ago
These are credit reporting agencies, not credit rating agencies. Credit rating agencies are primarily for directly assessing a credit report for the likelihood of the debtor to either pay back, or default, on a loan. On the other hand, the 3 credit reporting agencies (Experian, Equifax, TransUnion) work by simply gathering credit information, and using industry standard (and usually shared[0]) scoring models to assign a FICO or Vantage score to individuals, after which the lender can use any of their own classification criteria to deny credit or assign an interest rate. 0: https://docs.google.com/spreadsheets/d/1sI6l_Z5SyJqx4xXwlLYLaXOmP_R3i6XtnBYPYVDOlrg/edit?usp=sharing https://docs.google.com/spreadsheets/d/1sI6l_Z5SyJqx4xXwlLYL...
- phonon 4y ago
  Who do you think owns VantageScore? https://vantagescore.com/company/about-vantagescore/ https://vantagescore.com/company/about-vantagescore/
  - judge2020 4y ago
    The point is that it's standard. Credit rating agencies have their own formulas and risk assessment profiles, and typically assess a debtor's ability to pay back a debt in aggregate with other debtors. When companies are shuffling around and selling debt on the backend, they ask a credit rating agency to assess the debt, since a FICO/Vantage score isn't a full picture on how likely a debtor is to pay back a loan. The only difference between the 3 credit reporting agencies are how good their contracts are with lenders in terms of aggregating the most accurate and up-to-date data.
    - nerdponx 4y ago
      When you say "credit rating", are you talking about companies like Moody's? Or is there yet another layer of companies processing individual consumers' data behind the scenes? I definitely meant to write "credit reporting" in my original comment, but I never considered how credit rating and credit reporting companies might interact. Glad I made that mistake because I learned something from your comments.
      - judge2020 4y ago
        Yes, Moody's and the like that caused the 2008 financial crisis. It was indeed a mostly pedantic point, but even the OP there (cwkoss) said 'rating' when they meant 'reporting' since it wouldn't be hard for the government to run a data aggregation platform with a few backends dedicated to calculating FICO or Vantage scores. (Technically the Government already backs the entire credit rating agency and their loan ratings, since they gave out billions in bailout money in the 2008 crisis :P)

nceqs3 4y ago

If you think Equifax had bad cybersecurity, imagine a government run one.

Eisenstein 4y ago
Do you think the NSA is bad at Cybersecurity? If so, what makes you think so? If not, do you think the NSA is a private entity?
- DontchaKnowit 4y ago
  Do you think the government is going to bring NSA level security to the table? Probably not. And need I remind you that the NSA had millions of sensitive recirds stolen by a single IT tech? So no, actually, the NSA's security apparently isn't that great
  - Eisenstein 4y ago
    > Do you think the government is going to bring NSA level security to the table? Probably not. The argument I was opposing is 'the government can't do anything right compared to the private sector', not 'we need an NSA apparatus to secure our credit scores'. > And need I remind you that the NSA had millions of sensitive recirds stolen by a single IT tech? Which private company is immune to whistleblowers?
  - infinitezest 4y ago
    > And need I remind you that the NSA had millions of sensitive recirds stolen by a single IT tech? Are you talking about the contractor? Who worked for a private business?
seadan83 4y ago
Not everything government run is automatically worse. For a private company that is seemingly immune to bad PR over repeated full data breaches, security and security by design are costs. There are many private firms that should have an army of IT sec-ops, but instead have zero or close to it. Meanwhile, government IT tends to be the bottom of the barrel. Though, many government contracted sites are just fine. Overall, the incentives are not quite aligned for security and a company that does not have to care.

r3trohack3r 4y ago

Lifting this from a sibling. I’m not sure I 100% trust my government to decide what services I’m eligible for. I’d worry it would merge with the surveillance and police states. Imagine your cellphone pinging a tower during a protest and losing your ability to open a line of credit.

bluefirebrand 4y ago
This sort of thing actually did happen not long ago in Canada, too. Agree or disagree with the trucker protest, it's pretty messed up the government invoked emergency powers to freeze people's bank accounts over it. It's definitely too much power for the government to have.
Broken_Hippo 4y ago
Instead, you get companies that aren't penalized for fixing mistakes, even though they negatively affect you. The companies aren't technically deciding what services you are eligible for, and neither would the government - but they do give information to people that do. And they use a secret formula to do it. I don't know why you think that the government would do this with credit reports. I mean, all they have to do is pass laws to govern banking and declare that they need to not give folks with "bad credit" loans.
- thfuran 4y ago
  Requiring an act of Congress is a far higher standard then requiring an unannounced policy change from some agency.
- r3trohack3r 4y ago
  > And they use a secret formula to do it. I don't know why you think that the government would do this Last time I checked, the no-fly list is not publicly shared.