A report released last week by the Policy and Economic Research Council (PERC) on the dynamics between private credit bureaus (PCBs) and public credit registries (PCRs) found growing global momentum to strengthen PCRs. The report, titled “Are Expanding PCRs Crowding Out PCBs?” looked at the potentially harmful effects of this trend and the optimal way to structure credit information sharing systems. The new report was heralded by a PERC press release.
According to the World Bank, PCRs have traditionally played a supervisory and risk monitoring role, while PCBs provide predictive credit and other data to lenders and other market actors to aid underwriting credit and eligibility determination for individuals and to assess loan portfolio risk and performance.
A government-run credit bureau, like that envisioned by some Democrats in Congress and by the Biden Administration, will be harmful to the consumers that they are trying to protect. The PERC press release adds that “studies have repeatedly found that PCBs are correlated with increased lending to the private sector as a share of GDP and decreased rates of nonperforming loans, while PCRs were not statistically significant.”