What’s wrong with a corporate death sentence in the event of such egregious mistakes? There must be a severe enough punishment in order for a company’s risk department to take things seriously.
It is vindictive. When non-vindictive measures failure, the measure of last resort sadly tends to be the vindictive one. I don't know if this was part of your point (I imagine it was), but the vengeful carcerality of vindictive justice is independent from meaningful structural change that would prevent bad actors from repeating similar actions in the future. Everyone performs their role feigning outrage, repentance, regret and reconciliation, until the same thing happens all over again.
I would be surprised if that did not happen here. The collusion between credit bureaus, banks and lenders is well known for its issues to consumers, but without consequences for adverse consequences to them, business will continue as usual. Will it be savvy fraudsters who place backpressure on the crumbling ability of credit bureaus to prescreen for credit-worthiness? Will upstart incumbents see high margin, low fitness targets ripe for disruption? Will corporate raiders see ossifying remains just ripe enough to be scavenged? Even if all answers to these questions were in the affirmative, I don't know if any of that would lead to immediate change. But, I'd be surprised if business continued as usual forever. The bar for a step function level improvement is quite low, if you could somehow retrofit a better way to pull credit into legacy underwriting processes.
Source: Early stage engineer and prior executive at $PREVIOUS_FIRMS that included two growth stage consumer lending startups.
They pioneered the knowledge based authentication approach. It was never a good one. It's now utterly broken now that they leaked everyone's information.
At the very least, Equifax should be destroyed. And society would benefit more if it were destroyed in such a way to be an example for future organizations working in the space.
I do. They allow people who are lending money or extending credit to know what kind of risk they are likely taking on. They also let you know how risky you appear to be when you ask someone for a loan or credit. This allows people to reduce their risk, and it allows people to understand and manage the risk that they present.
Each party to a transaction has a different perspective. Speaking about the benefits to one party while ignoring the harm to others is nonsensical. Comprehensive surveillance databases obviously benefit lenders, or they wouldn't pay to create them. But general society is harmed by creating surveillance records that would make even the most staunch Stasi agent blush.
Speaking how one party can better conform to the other party's requirements is not an honest description of both perspectives.
Bad lending is better attributed to a mistaken belief that borrowers can be perfectly modeled to reduce variance. The economic crunch we're currently facing has been directly caused by cheap credit based on such assumptions which, once again, turn out to be suddenly correlated.
This seems vindictive. Their behaviour should be corrected and other people deterred. We shouldn't be calling for blood!