Banks Pressure Equifax To Get Its Act Together

Financial services firms, it seems, are running out of patience with Equifax.

According to reports in Reuters, the credit reporting bureau runs the risk of losing support from banks — and soon, unless it can show that it has managed to get its cybersecurity situation nailed down.

It would help if they wouldn’t send their recently breached customers to faked versions of the site meant to help them, we imagine.

Equifax needs banks, and in a big way — the data that banks give Equifax on consumers’ debts and payments is what the company uses to make credit reports to sell to other potential creditors.

“If we don’t feel that they can do the job, then we will obviously look at whether we want to continue to do business with them,” said an executive at a large bank who declined to be quoted by name.

The “down” side is that by dropping Equifax, banks would become even more reliant on the data collected by its competitors — TransUnion and Experian.

But Equifax might be safe merely by dint of being so engrained in the system: Government-backed mortgage finance companies Fannie Mae and Freddie Mac, as a matter of policy, check all three scores — and government agencies don’t much like to change their policies.  That, according to reports, might just be enough to shield Equifax from the full measure of possible blowback from banks.

“Given the level of interdependence between lenders and these data providers, they have a vested interest in there being more than two and would like Equifax to still exist,” said James Thomas, an analyst of corporate credit at Standard & Poor’s.

“If there’s only two players, then they have less ability to play them against one another” in negotiating prices for credit reports, Thomas said.

But the willingness of lenders to support Equifax is damaged by the firm’s handling of the hack so far — which has failed to impress anyone.

“Most of the major financial institutions learned about it through the media,” one banker said. “And, their responsiveness to customers has been slow and unclear as well. We would go down to two [bureaus] if we ultimately get to the point where we think that is necessary.”

Equifax said in a statement that it was supporting any customers who may have been impacted by the hack.

“We value our banking customers and have been in close communication with them.”

But not close enough to please, apparently.