When the new Congress is sworn in next month, it will kick off at least two years of split control for the institution, with Democrats in control of the Senate and Republicans in control of the House – both with relatively narrow majorities.
The two chambers may initially put forward separate agendas, but the current makeup of Congress all but requires bipartisan cooperation to pass legislation. Thankfully, the 117th Congress laid some groundwork in the areas of financial inclusion and data privacy, setting up a real opportunity for the next Congress to score some wins.
One notable example is the Credit Access and Inclusion Act, legislation sponsored by Senator Tim Scott (SC) and Senator Joe Manchin (WV) in the Senate and Representative French Hill (AR) in the House. Both bills encourage reporting of alternative data to the credit file, which allows payments for rent, utilities and other bills to help “credit invisible” borrowers build credit. TransUnion is a strong supporter of the use of alternative data, and we believe it can help unlock a host of new financial opportunities for underserved consumers.
The Senate version earned bipartisan support from two prominent Democratic Senators. And while the House version was introduced late in the session, previous Congresses have seen the idea garner meaningful bipartisan support in the House. With interest rates on the rise, there’s no better time to help borrowers responsibly access credit. This is an initiative that could generate real momentum.
In the same vein, Congress has the opportunity to examine some ongoing regulatory activity at the Federal Housing Finance Administration (FHFA). In October, FHFA made a major announcement related to conventional mortgage financing, allowing the use of VantageScore’s data models for use by Fannie Mae and Freddie Mac. VantageScore hailed the changes as an opportunity to “bring improved accuracy and a more inclusive approach to evaluating borrowers” -- a win for potential homebuyers that will nonetheless take years to implement.
Congress can play a role encouraging swift implementation so potential homebuyers can begin to take advantage. Also in the housing space, Congress should also consider reviewing the FHFA’s decision to move from a tri-merge credit report to a bi-merge. Moving away from the tri-merge system could mean that the FHFA will have less accurate pictures of consumers when they apply for mortgages. This could mean that consumers will be incorrectly assessed in the mortgage underwriting process, which has negative implications for both the individual consumer and the macro housing market.
Finally, the 117th Congress took a major step forward in the area of data privacy. The mere fact that major legislation passed out of committee with bipartisan support is a good sign that Congress is ready to resolve the patchwork data privacy system America operates within today. We are excited to engage with policymakers as the federal privacy landscape continues to develop.
None of these issues are simple within themselves, but each are ripe for the bipartisan cooperation that the 118th Congress will demand by design. We look forward to working with elected leaders on both sides to continue making progress on financial inclusion and data privacy over the coming months.