increasingly common to use credit reports as part of the new hire screening process…

When I first heard of this practice , I thought that for most jobs , it’s downright silly . Does it ever occur to anyone that a bad credit rating might be tied to being UNEMPLOYED?. In other words, it’s a Catch-22 situation , that this practice can further perpetuate.

… it has become common practice to put vendors to large corporations through a formal approval process..

I can attest to the folly of that . I worked for a landscaping/garden center/sod farm business. We recieved a request from Lowe’s to sell them sod . They sought us out, not the other way around . Most of our larger sod sales were based on a handshake deal, or even more commonly, just a phone call . If somebody wasn’t a good customer , they got no more sod . The next closet grower was > 100 miles away , and had the wrong soil , which caused problems . Suffice it to say , there was a substantial penalty for bad behavior . For our part , any poor performance (not that we would) could hurt other aspects of the business , through word-of-mouth criticism.

Along comes the BigBoxMarts. They were offering sod that was grown far away, on a different soil than our area , of poorer quality ( less care and younger age) that cost more to ship, that spent more time in transit . Even though he was skeptical of the long trem effect on our business, my boss, the owner agreed to become a vendor . That is , until the vendor agreement arrived . It was a twenty-page booklet . Even so he started to fill it out . Then, as he got further into it ,my boss got more and more irritated , until he threw it across the room , into the garbage .
The deal was one-sided, intrusive, insulting and we wouldn’t get paid for 90 days . Also if they mishandled it, and killed it , they wouldn’t have to pay. Lowe’s could have had a better product, at less expense, with a same-day (3-4hrs) response time for more , but process trumped everything else .

It defines a “credit report” as being “any written, oral, or other communication of any information…bearing on a consumer’s credit worthiness, credit standing, credit capacity, CHARACTER, general reputation, personal characteristics, or mode of living…” (emphasis mine).

Is it possible that this has misled lenders into believing that FICO is a stand-in for character?

E

But it is indeed an interesting drama to watch the profit-seeking crowd sing the hymns to morality – as they perceive that strange and beautiful creature.

Protestant Ethic and Capitalism

The July 2005 Report of the Counterparty Risk Management Policy Group II draws a distinction between financial disturbances and systemic or potentially systemic “financial shocks.” An excerpt from the report follows:

“Financial disturbances arise with some frequency and can have their origins in a number of factors ranging from a geopolitical event such as September 11 to a failure of a specific financial or nonfinancial corporation. However, financial disturbances do not exhibit the very rapid contagion effects present in financial shocks. The absence of rapid and far reaching contagion effects may be due to any number of factors including: (1) the event was widely discounted in the first place, (2) public or private policy responses are swift and decisive, and/or (3) the event does not raise broad-based concerns about potential or actual credit losses that could compromise the ability of financial counterparties to perform in a manner consistent with their obligations. Credit-related problems, as discussed below, are of special concern because — as we have seen on many occasions — financial markets have a remarkable capacity to cope with financial disturbances so long as widespread credit problems are not seen as an imminent threat. Experience also shows that the fact or the fear of large credit losses is often the key variable through which financial disturbances become financial shocks.”

The investigation is looking to allegations against Countrywide Financial about possible securities fraud and checking whether the company made misrepresentations about its financial state as well as the condition of its mortgages in its filings.

The Countrywide probe was first reported by the Wall Street Journal on Saturday, identifying it as one of the fourteen companies under investigation by the FBI as part of a larger investigation into the mortgage crisis. In late January, the FBI announced that it was probing 14 loan agencies for accounting fraud, insider trading, and various other violations in relation to subprime mortgage loans.