This comes as no surprise...It is a little known fact by most Americans that the 3 reporting agencies are not government agencies. They are for profit, and this next little tid bit should really tick you off, the 3 agencies make more money on people who have lower scores. The more people with lower scores the more money they make! If that didn't tick you off yet, this might, they set the rules for the scores not the government! So the people who will benefit by lower scores set the rules on how people will be scored.
I am throwing in the towel. Just as Schiller said With stupidity the gods themselves struggle in vain.
It just amazes me that you have to wear it so openly on your sleeve.
Can't you people educate yourselves a little bit about statistical systems? Just Google it for Christ sake.
they are "worthless" in an age where lenders lowered their lending standards to include anyone who wanted a loan or mortgage.
But in this new enlightened era, lenders will once again depend on FICO information to make decisions, which is especially the case now that the securitization model is broken for good.
I'm not a buyer or seller here, but on the sidelines waiting for the latest SEC filings.
Your statement about Meredith Whitney calling FICO worthless was inaccurate. She was speaking of the AmEx investor conference, and her quote was: "Initially, in the summer of 2007, they (meaning the large banks) started pulling people's credit because of zip code because FICO was so unreliable."
While that isn't very laudatory of FICO, it is far from her saying that FICO was worthless. It also highlights a number of inaccurate assumptions on Ms. Whitney's part on the fundamental role of a FICO score. What many banks did during the over-heated market was to grant loans based either on a credit score alone (often even a mediocre score), ignoring all other variables, or on demonstrably fraudulent loan applications. As has been pointed out before, a FICO score is only one tool in the lending process. Careful underwriting is the other critical component.
So the banks' remedy here was essentially to redline entire zip codes and pull people's credit? If one goes and looks at the federal fair lending requirements, red-lining by zip code is illegal. So Ms. Whitney blithely states that because FICO was "so unreliable" the banks just pulled people's credit because of their zip codes. Pretty silly banking practices.
Isn't Meredith Whitney the same "banking analyst" that never seemed to recognize that the banks she "analyzes" were all performing practices that were idiotic?
Well let's be very clear about FICO scores. They are backward looking. As much as 2 years backward looking. So they cannot predict the future even in stable times far less turbulent times.
Let's not forget that the FICO sales teams including Senior Management in FICO are positioning FICO scores as robust and reliable. All they do is "rank order" nothing else.
That's the reason the so called improved FICO score was tamely launched at Interact 2009. It was talked about but in the usual FICO style there was no product available yet and FICO is allegedly looking for partners. In laymans terms this means FICO want Banks to do research and pay for the FICO development so that FICO can sell it at a profit. The reality is simply that the new score will only be a very slight improvemnt on the old score. Reminds me of similar lyrics from that Brit Band the WHO. Meet the new score, same as the old score.....
Anti-CNBC Petition and website started by Media Matters.
Here is the link to the daily bail that will get you there.
Already 17,000 people have signed the petition that will be delivered to CNBC later this week.
This is a positive development for sure.