(Bloomberg News) The U.S. Consumer Financial Protection Bureau is likely to place the three major credit-reporting bureaus, Equifax Inc., Experian Plc and TransUnion LLC, under direct supervision by federal examiners.
The Dodd-Frank financial regulatory overhaul requires the new agency to propose regulations by July 21, 2012, on whether a company constitutes a "larger participant" in consumer financial services. That designation would lead to supervision similar to that of banks for the three firms, which provide credit reports on borrowers to prospective lenders.
Three credit bureaus are likely to meet that legal test, Corey Stone, the consumer agency's assistant director for credit information markets, told consumer advocates last month, according to three people present at the meeting. Bureau officials have also delivered this message directly to two of the three firms, according to the companies.
Top officials at the consumer bureau have been critical of credit information bureaus in the past. Consumer advocates have long charged that the Big Three bureaus--as Experian, TransUnion and Equifax are often known--aren't transparent about how credit scores are calculated.
Tim Klein, a spokesman for Equifax, said federal officials have told the Atlanta-based firm it will face supervision. Colleen Tunney, a spokeswoman for closely held TransUnion in Chicago, said her firm hasn't been explicitly informed but that "we do expect to be supervised by the CFPB."
Tony Hadley, senior vice president for government affairs and public policy at Dublin-based Experian, said the agency's creation marks a new relationship between his company and the U.S. government, including supervision. The full impact "depends on implementation," he said.