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logo    Good Credit? Good for whom?


The people who govern America on all levels have a tendency to place the burden for solving problems on consumers. But consumers cannot solve the problems they are encouraged to solve. Some are simply unwilling to do what is required, some cannot afford to do what is required, and some who are willing and can afford to simply cannot.

I have written about this before concerning water conservation:

"You present eight suggestions for ordinary people to follow in their homes. And although each would indeed save water, the effectiveness of these solutions would depend entirely upon the number of people you could get to work together in these ways. But anyone who believes that it is possible to get enough people to cooperate in such ways to have a significant effect on the problem is a dreamer.

Yet I can think of things that can have significant effects on the problem. I have over the past many years lived in seven American states, and not once have I lived in a house that had insulated hot water pipes. As a result, one had to run the hot water two or three minutes before the water became hot enough to bathe in. And I suggest that this is happening in almost every American home. This waste could be eliminated with good building codes. But building codes require businesses to tackle the problem, and American legislators are not inclined to do that.

Here in Texas, cities are always imposing watering restrictions; yet they allow builders to put houses on unstable soil using foundations not meant for such conditions. The owners of these homes are told to keep the soil around their foundations moist year round to ameliorate foundation problems. And one city I lived in that had watering restrictions also had a recycling program that required citizens to wash any glass ware that was to be recycled."

Any water saved by the eight suggestions would be dwarfed by better building codes.

Similar problems abound concerning recycling. Many are unwilling to go to the trouble, and others simply cannot recycle. I live in a single family home with a two-car garage, but I don't have room for multiple boxes into which to separate and store recyclables.  And the alley behind the house is not wide enough to accommodate recycling bins. People who live in apartments have even less room. Many elderly and urban dwellers don't drive or have vehicles into which they can load their recyclables and cart them to recycling centers. A program requiring consumers to recycle can never succeed.

But my present concern is a more serious problem--protecting our good credit. Given the explosion of identity theft, insurance companies are now selling identity theft and credit protection insurance. But identity theft and credit protection are not consumer problems; they are banker problems caused by banking practices.

Why do bankers and other businesses continue to use social security numbers as identifiers? Why aren't the identities of borrowers verified by bankers? Why do they rely on signatures on credit card receipts and loan papers when fingerprints would effective deter fraud, especially if fingerprints were accompanied with a photograph? Technology to enable both of these has been available for some time. And finally just who benefits most from so-called good credit?

A consumer with good credit does enjoy some convenience, but s/he pays a hefty price for it. Consumers who don't use credit or use it sparingly save all the money that goes to banks as interest. As a result, they can buy more, not less. And if everyone had bad credit, the bankers would either have to find other means of identifying reliable borrowers or curtail their lending. But lending is the mana of banking. No lending, no profit. Consumers with bad credit save the money that consumers who use good credit regularly send directly to banks.

So as long as bankers continue to use the practices that allow fraud to flourish, consumers will always be at risk of identity theft no matter what safeguards they engage in. Consumers cannot solve the problem, only bankers can. But the bankers will lead you to believe that they can sell you something that will protect your good credit when all they really want is more of your money. The good credit they want you to pay to protect is the credit that is good for them, not you. (6/30/08)