Federal Deposit
Insurance Corporation

From: Thomas Linke
Sent: Friday, December 28, 2007 2:58 PM
To: Comments
Subject: Public Submission

Public Comments on Interagency Notice of Proposed Rulemaking: Procedures To Enhance the Accuracy and
 Integrity of Information Furnished to Consumer Reporting Agencies Under Section 312 of the Fair and Accurate Credit Transactions Act:

Title: Interagency Notice of Proposed Rulemaking: Procedures To Enhance the Accuracy and Integrity of Information Furnished 
to Consumer Reporting Agencies Under Section 312 of the Fair and Accurate Credit Transactions Act
FR Document Number: E7-23549 Legacy Document ID: RIN: 1557-AC89
Publish Date: 12/13/2007 00:00:00
Submitter Info:

First Name: Thomas
Last Name: Linke
City: Pensacola
Country: United States
State or Province: FL
Postal Code: 32503-1906
Organization Name: 

Comment Info: =================================================================

General Comment: 

I am a banker with more than 30 years lending experience, the majority of which 
has been spent as the senior lender in regional and community banks.  For more 
than 10 years I have worked as a banking consultant assisting banks with lending 
issues.  Our firm has worked with more than 90 client banks in seven states.  The 
following comments are offered for your consideration regarding the proposed 
Procedures to Enhance the Accuracy and Integrity of Information Furnished to 
Consumer Reporting Agencies Under Section 312 of the Fair and Accurate Credit 
Transactions Act.

Under the proposed language regarding accuracy and integrity regulations, the 
Guidelines Definition Approach in the proposed revision to the FACT Act, as well 
as in the Interagency Guidelines revision, defines "accuracy" to mean that "any 
information that a furnisher provides to a CRA about an account of other 
relationship with the consumer reflects without error the terms of and liability for 
the account or other relationship and the consumer's performance or other 
conduct with respect to the account or other relationship."  The term "without error" 
is of concern, as banks are targets for litigation.  I am familiar with a bank that is 
accused of forcing a borrower into bankruptcy for the erroneous reporting of one 
loan having been one time over 30 days late and another loan erroneously reported 
as 60 days late.  Within days of the first occurrence, the bank identified the error 
prior to the borrower's knowledge, notified the credit reporting agencies to correct 
the error (both by facsimile and by letter), and provided written notification to the 
borrower.  The error was promptly corrected by all credit reporting agencies and 
the credit reports updated to reflect accurate information.  The second reporting 
error involved a different loan and occurred some time later.  That error was not 
identified by the bank or reported to the bank by the borrower prior to the loan 
being paid off a few months later.  The borrower subsequently filed for bankruptcy 
and has sued the bank for a substantial sum, claiming these two reporting errors 
forced him into bankruptcy.  While the borrower generally has a clean credit 
history otherwise, further investigation reveals subprime mortgage lenders made 
loans on rental properties based upon unverified income that resulted in a 
Debt/Income Ratio exceeding 100%.  The bank has been forced to spend a 
significant amount defending itself.  It should be noted that at the time the errors 
occurred, the bank had total assets of approximately $30 million and 
approximately 15 employees.

The words "without error" are of concern.  The purpose of the regulation is to make 
every effort to eliminate errors in credit reporting.  Care should be taken to ensure 
that the proposed language does not result in a bank being in violation of the law 
for an honest mistake that is promptly corrected.  If community banks cease 
reporting in order to eliminate the risk of litigation over an honest mistake, credit 
information used in the credit decision process will be compromised.  For these 
reasons, use of the version that does not contain the words "without error" is 
recommended.