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Hearing of the Oversight and Investigations Subcommittee of the House Committee on Financial Services - Credit-Based Insurance Scores: Are They Fair?


Location: Washington, DC

Hearing of the Oversight and Investigations Subcommittee of the House Committee on Financial Services - Credit-Based Insurance Scores: Are They Fair?


REP. PETER ROSKAM (R-IL): Thank you, Mr. Chairman. First of all, to all six of you witnesses, I appreciate your taking the time to give us the benefit of your wisdom today. And I found it to be helpful and instructive.

I guess, commissioner, you're here in a sense because I think you're experiencing the same experience I had as a school boy, not to compare your work with my essays as a kid. But what I would do occasionally, and I would sense that others in this room have done the same thing, is you write an essay. And it's before that it's actually time to submit the essay, and you go to the teacher and you say, "Hey, could you look at this?" And the teacher would come back and say, "Hum well, I think you need another paragraph here, and your conclusion isn't very good, and your margins aren't very well."

And then, you go back to your desk and you rewrite the essay, and you submit it again, and you get an "A" lo and behold because you're giving the right answers. And my sense is that there's a little bit of a subtext of the answers that you came up with on the first draft aren't necessarily the answers that everybody was looking for. So hang in there with whatever version --


-- or incarnation of the study you come up with in the future. But I appreciate your evaluating the data, you know, under the mandate that you had. And you're calling balls and strikes the way I see them, and I know it tends to be sort of a charged up area, but I appreciate your integrity in looking at those things.

Commissioner Schmidt, when I was listening to your testimony, it seems like your experience is actually very limited in that Hawaii -- unless you have other professional experience that I'm not aware of, but since Hawaii banned credit scoring in the late 80s, you don't have the same level of experience as a regulator that other states do that have dealt with it. So your testimony was conclusionary, but it was anecdotal, based on your observations but not on your actual experience.

Former member Kreidler, my pen came out at the same moment that Mr. Miller's pen came out, with your -- your observation that to ban credit scoring will redistribute what you pay. And that is that's part of really what's driving this conversation, isn't it? It is who pays what, and how do we -- how do we move forward?

You know, you -- you shared with us your experience in Washington and your particular vantage point as an elected commissioner, which has different types of pressures than Mr. Shapo experienced in Illinois as an appointed commissioner. But I think that -- that there's going to be sort of more said, and you'll find yourself quoted in absentia from time to time, based on that observation.

And I appreciate that, because it was -- I think it was a forthright thing to say, that once you change these models, once you take tools away and put different things in, people are going to pay differently, and I think that that's something that this committee needs to be aware of.

Mr. Birnbaum, when you said that credit scoring is a proxy, it sounded a little conspiratorial for me. And I'd love to have a conversation with you, maybe offline, to learn more about where you think the helicopters are coming over the hilltop. But I do seriously want to learn what you think the proxy battle is actually all about.

But what I heard you and Mr. Rodriguez saying, and I think that this is maybe an area to work on, is this notion of people having thin files -- I think that was the term of art that you used -- but not enough information from a credit point of view. And those people would -- would be left behind, and that's an area, I think, a common ground, that if there is going to be credit scoring, there -- there has to be an ability to, you know, include those things that some groups are using phone bills, utility bills, and those types of things. And I think that's an area that we may all be able to come together and focus in on.

Mr. Shapo is the former director. Clear thinking -- good, clear thinking from the land of Lincoln, and it was good to see you. Thank you.

And with that I yield back the balance of my time.


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