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Credit industry lobbyists are on the verge of persuading Congress that the best way to eliminate credit reporting problems is to restrict the authority of those who have done the most to uncover the abuses - state attorneys general.

In effect, the industry is saying to Congress go ahead and create a "dream team" to protect consumers - just make sure you keep the NBA players on the bench.State attorneys general have taken the lead role in responding to consumers' concerns about credit reporting. Multistate actions against credit reporting companies have resulted in agreements to clean up inaccuracies and reform industry practices.

And there is much that needs reform.

Consider, for instance, the 3,000 residents of Norwich, Woodstock and other Vermont towns who were incorrectly listed as "tax deadbeats" by TRW and Equifax, after a subcontractor who worked for both credit reporting giants confused the town tax rolls with the list of delinquent taxpayers.

Or consider the case of Robert Corbey, who applied for a $2,000 loan to put vinyl siding on his Maryland home. His lender denied the loan, citing unpaid mortgage bills on two homes in Virginia and an IRS lien against him and his wife, Ann.

In fact, Corbey had paid off his 30-year mortgage, had never lived in Virginia and had never been married to anyone name Ann. The erroneous information came from an Equifax credit report, and it took Corbey more then eight months to correct the error.

Problems with inaccurate credit reports have become so widespread that they are now the single largest source of consumer complaints to the Federal Trade Commission.

A 1991 study by Consumer Union found that nearly half of all credit reports contain inaccuracies and one in five contain errors severe enough to damage a consumer's creditworthiness.

Many states have enacted new statutes that fill in the gaps left by current and pending federal legislation.

Vermont and Maryland, for example, responded to the credit problems of their citizens by passing laws giving consumers the right to a free annual copy of their credit report from each bureau. Currently about 20 states have credit reporting laws on their books, and there are 20 bills pending in state capitols around the country.

The credit reporting industry now seeks congressional preemption of state initiatives to protect consumers. Its lobbyists argue that the industry cannot operate if states exercise their long-standing authority to protect consumers.

But the industry's insistence on national standards ignores the local aspects of credit reporting. Even the largest credit reporting companies rely heavily on local credit bureaus and data collectors to gather information on consumers for their files.

Moreover, states have the capacity to respond to the regional needs of their citizens quickly. It has taken more than 20 years for Congress to reform the industry, and it may take another 20 years for Congress to revisit the issue. In the meantime, states should be free to develop strategies to protect their citizens from invasions of privacy as new technologies unfold.

Finally, the states are not insisting on the ability to engage in superfluous regulation over the minutiae of credit reporting. Rather, the states want to retain the ability to fill in the gaps left by federal legislation.

(Jeffrey Amestoy is Vermont's attorney general and president of the National Association of Attorneys General.)