Wednesday, December 18, 2013

Much ado about nothing

(Edited, 6:17pm, 12-18-13)
Trentoncity councilwoman Phyllis Holly-Ward has introduced a resolution requesting that all candidates for elected office submit a copy of their credit report to the city clerk (13-678 RESOLUTION REQUESTING CANDIDATES FOR MUNICIPAL OFFICE TO FILE A CREDIT REPORT WITH THE OFFICE OF THE CITY CLERK). Those reports would become public records and the suggestion is that a bad credit report could be one indication of a person’s suitability to hold public office.

The proposal has generated a lot of discourse. Judging from some of the commentary posted in social media, it has also generated some confusion.

First off, this is a resolution. It is not an ordinance. The difference is often misunderstood. Stated simply:
  • A resolution is a statement, opinion, appointment, etc. made by a municipal body.
  • An ordinance is a law, enacted by the governing body, signed by the Mayor (or adopted over his/her veto), and enforced by the police and courts.
So, resolution 13-678, if passed, would merely be the “opinion”of a majority of the members of the council that candidates for municipal office be requested to submit a credit report. It is not required. It is merely a request.
Some people seem to be equating the credit report disclosure with the financial disclosure form required of elected officials and other public officers. These are two different things.
The financial disclosure form requires municipal officers to declare sources of income in an effort to avoid/eliminate conflicts of interest. The financial disclosure information and the credit report have no direct relationship to one another. The former strictly looks at income and where it comes from while the latter deals with an individual’s overall financial health (NOTE: health does not necessarily equate to wealth).
The financial disclosure form has to be filed annually once someone is elected or appointed to an office.
The credit report is being looked at ahead of time as one of several gauges of a candidate’s over all fit for office. It is not meant to serve as the be all and end all, sole deciding factor. It is just one, optional, item that voters can use to help vet candidates.
We confess, we didn't so we researched it. According to the Federal Reserve website a credit report includes:
  • Your identity. Your name, address, full or partial Social Security number, date of birth, and possibly employment information.
  • Your existing credit. Information about credit that you have, such as your credit card accounts, mortgages, car loans, and student loans. It may also include the terms of your credit, how much you owe your creditors, and your history of making payments.
  • Your public record. Information about any court judgments against you, any tax liens against your property, or whether you have filed for bankruptcy.
  • Inquiries about you. A list of companies or persons who recently requested a copy of your report
No one has stated that a bad credit report automatically disqualifies someone from seeking municipal office. Just like a lender uses the information to determine the credit worthiness of an individual, a voter would be able to use the report as a tool to help construct a more complete picture of a candidate’s potential success as an elected official.

Another similar measure might be a candidate's ability to properly complete and submit the required reports to the NJ Election Law Enforcement Commission. The inability for a candidate to properly file on time would not necessarily disqualify them from holding office. At the same time, repeated failure to meet the filing requirments might be taken into consideration when deciding whether or not that candidate is worthy of a vote.
Many people have pointed out reasons beyond an individual’s control that would negatively impact his or her credit report. If there was an instance of identity theft or a sudden/prolonged health occurrence that caused an individual to run up debt, that individual did nothing wrong. They simply need to provide a concise explanation if and when asked. Easy.
On the other hand, an individual with poor credit and a history of liens, bankruptcies, etc that are not explained or that are due to repeated poor decision making probably indicates that person is NOT a good candidate for public office.
If you think this is all nobody’s business, that’s fine. However, it should be noted that there is a lot of information available to the public that can, and most likely will, be discovered and revealed during the course of a campaign. Candidates can provide their history willingly or wait until it is revealed some other way.
Of course, certain items on the credit report should be redacted before being made public (social security number, date of birth and the like). This is standard procedure for the release of information to the public.
A lot has been made about the fact that all of the information contained in a credit report is personal and should not have to be revealed. A candidate for office is putting himself or herself out there as someone worthy of the public’s trust. Is it wrong to ask them to be open and transparent?
Any number of websites can provide access to a person’s criminal history, record of judgments, liens and such. It is a safe bet that all candidates in the upcoming municipal election will have their records looked at and anything questionable or controversial will likely be made public.
Some have pointed out that there is a movement at both the state and federal level to ban credit checks of prospective employees by employers. The bill already approved by the state senate (S455) does make exceptions for employees whose jobs will include activities of a financial nature (not merely handling money in a retail exchange).
Obviously, the legislature understands that a credit check can be an effective tool in gauging someone’s fit for a particular job. Since elected officials make decisions regarding the municipal budget, why shouldn’t their credit check be available to use when deciding who to vote for.
People have suggested that this resolution smacks of nothing more than “silly season” politics. They have thrown up a variety of reasons why this resolution should be voted down. They have not provided any suggestions on how the voter might better measure a candidate’s worth, his or her fiscal fitness, to serve.
We’re listening.


Anonymous said...

Jim -

(also posted on Facebook) After reading your post, where you confess you had to research what is contained in a credit report ---well, this actually explains for me why many people that I respect seem to think this is a good idea. I think that I now understand that most commenters have seen their own credit report; perhaps also a family member's, that may be similar to their own, but don't have much more familiarity with what these reports can contain. I check credit for clients and these reports can be simple, and they can be quite complex. People with excellent credit can have extensive credits lines and accounts that are of no concern to the public. People with complex financial obligations would likely not want to have the world know their mortgage or car loan payment, or their department store revolving loan balances, their SBA loan, investment property mortgages, and all the rest. They would simply choose not to run for office. Information such as bankruptcies and tax liens can be readily found in pubic records and do reflect the sort of egregious financial track records voters would rightly want to see. You don't need a credit report for that. Good people choosing not to run is the troubling effect I see from this initiative. All of the claims that it is not a "requirement" are disingenuous because as sure as the sun rises in the east, the implication will follow that those not disclosing are hiding something.

For whatever thats worth -- Anne

Old Mill Hill said...

Guess we are just going to have to agree to disagree.

It is ok for you to have access to this information on behalf of your clients, but the voters are not entitled to the same information about those who are seeking public office.

Or is it that the voters are not sophisticated enough to analyze these "complex" reports and make that part of their decision making process about who to vote for?

As for "good people choosing not to run" because of this, there are a million excuses for "good people" not to run. If they are truly motivated, this shouldn't stop them.

Anonymous said...

My clients are entering into a contract (typically a lease) requiring an understanding of that person's credit history. It is immediately and specifically germane. And I do know that you are going to say that the office holder is entering into a contract, yada yada yada. But its apples and oranges. Yes we'll need to agree to disagree.


Anonymous said...

What about criminal history check, past job evaluations, etc? I believe this would also be appropriate. This seems to be more relevant to Trenton, don't you think so?