The Federal Reserve must not read much. Why else would they act as if a few more details in Home Mortgage Disclosure Act data would constitute a privacy concern?
You may been reading the recent series in the WSJ about privacy in the digital age. The basic message is: there is no privacy. Here are a few of the tidbits:
- Upon visiting a web site, those companies can pull your data in 1/5th of a second. The price is about 1/10th of one cent. They use that data to suggest a product choice. One visitor (their example is a rural working class senior citizen) is encouraged to buy a $250,000 life insurance policy. Another (college-educated high income suburbanite) is prompted to look at a $2 million policy). The possibilities for steering people into sub-prime loans are pretty obvious.
- You can remove cookies, but you cannot remove “beacons,” which serve as data aggregators. They can cross-tab your visit histories with information in the other beacons that are already on your computer.
- There is little or no anonymity. Most sites collect specific data so specific that even without a name, the identity is clear: address (from your last online purchase), age, gender, marital status, health concerns (WebMD!), income, zip code, travel interests, and education. These sites can claim that they do not reveal personal information if they do not pass on your name.
All of this should be considered in the context of how the Federal Reserve is implementing the data directives from Congress that were included in the Dodd-Frank Bill. Congress wants that information to be out there, but the rule-making process will ultimately determine how fully those instructions are implemented.
Precedent for New Data
In the wake of the subprime crisis, people are asking what could be done to give regular people a better chance to understand and comment on problems with mortgage markets. For years, data has been available for the asking to anyone that wanted to analyse how loans were being made. Many people have an interest in knowing what is going on. It isn’t just a few wonks. All kinds of people, from homeowners to local governments to neighborhood associations, are known to go to HMDA data for information about their markets.
Unfortunately, that data has fallen behind the times. We know what constitutes a “risky” mortgage – all of those exotic deals that are waiting to cause trouble. That would include the option-ARM, or the loan with the huge balloon payment, or when a lender never checked on the income of a potential borrower. These things were all too common, and now they are the common culprits in our mortgage crisis. “If only we could have known about this,” is a common refrain. People want to stop “the fire next time.” They want better data.
Unfortunately, the Federal Reserve is pushing back. There are a few essential points to their argument, but they all boil down to this: we don’t want to let consumer information get out into the public.
As if.
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