I never cease to be amazed at the naivete of lawmakers who think that just because they pass a law, that behavior is modified and whatever social purpose they had in mind will be advanced. This is strange because I think that in politics there is a huge gulf between perception and reality anyway. You think that people who saw this all around them would understand that it happens in the rest of the world too.
The fact is that passing a law is just the first step in a long process. Someone has to put that law into some kind of bureaucratese, what we would call regulations. Next, someone has to figure out who is in charge of enforcing the rules and what the penalties are going to be for failure to follow them.
Finally, someone has to be enabled to go out and enforce the regulations, like have an enforcement staff up to the task. You can already see the problem. There are lots of opportunities for failure between the halls of Congress and Main Street.
A topic of current interest is the ability of consumers to fix mistakes on their credit reports. The intention of the law that consumers can dispute erroneous items and have them removed quickly and easily. All of us who work with borrowers who have credit problems realize that this has been a joke for years, not just because Congress wants to hold hearings.
The current hearings on all matter of mortgage and credit related malfeasance have been brought on by this very problem. One Congressman chided the Federal Reserve Board for not having implemented rules that would have "enabled" previously passed legislation.
We’ll see how that one turns out, but I’m not holding my breath. Right now, it looks as if the creditors seem to be taking the position that they have a lot to lose by not including information that may or may not be true. Balance that against the damage to consumers from making it hard to eliminate that same information. Thus it’s not really a stand-off. The creditors are holding the cards.
Whatever agency ends up in charge, someone needs to step in and TELL creditors that they don’t have a choice on this, that they have to make it easier to remove questionable data and make it painful when they don’t.
Randy Johnson Randy is a Credit.com contributor and seasoned mortgage expert. He writes about home buying, mortgage laws and real estate finance issues. He has financed over $1 billion in properties, is the author of How to Save Thousands of Dollars on your Home Mortgage and he is a feature columnist for Savvy Borrower.
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