It’s generally agreed that excessively lax lending standards were major contributors to the financial crisis that precipitated the Great Recession.  So, Washington wants to do it again, only more.  Here’s part of what has to say:

In a just-released federal report, the administration portrays these “credit invisibles” as victims of a traditional credit-scoring system. And since most are minorities, it claims that excluding them from the financial mainstream is discriminatory.

“These results suggest that the problems that accompany having a limited credit history are disproportionately borne by blacks, Hispanics and lower-income consumers,” the 37-page Consumer Financial Protection Bureau report concludes.

“Our report found that black and Hispanic consumers are more likely than white or Asian consumers to have limited credit records,” CFPB Director Richard Cordray said in a press call.

“About 15% of black and Hispanic consumers are credit invisibles compared to 9% of white consumers (and) about 13% of black consumers and 12% of Hispanic consumers are thought to be among the unscored — compared to only 7% of white consumers.”

Added Cordray, “These consumers face reduced access to credit that continues to hamper their opportunities for growth throughout their lives.”

To remedy the “credit inequality,” credit reporting agencies are being pressed to generate scores for this high-risk group based on payments of cellphone and utility bills, as well as immigrant remittances.

It hopes that once they secure a FICO score, they can move a step closer to qualifying for mortgages, car loans and credit cards. Without credit scores, Cordray says, these consumers are a target for “predatory lenders” such as payday lenders who charge high interest rates.

What could go wrong?  Full article is here.

(Originally published 5-16-2015 on my personal blog)