Thursday, December 04, 2008

Governments should require acquiring companies to strenghten consumer idenfitication as condition for bailout money

During the financial crisis and following bailouts, a lot of banks, insurance companies and financial institutions buy weaker comparable institutions, sometimes as a condition of receiving government guarantees or shares. This can happen in the United States and in Europe or Britain.

Even so, financial institutions are shedding jobs, not just of analysts and traders but also of support information technology staffs, and postponing new projects. Even in “retirement”, I have heard some disturbing stories from other associates first-hand recently.

It seems that government could prod these companies to improve their due diligence in identifying credit or loan applicants. Most companies have some soft of National Change of Address interface, and acquiring other businesses would mean that stronger acquiring companies would need to schedule projects to integrate these acquired companies into their NCOA systems.

As I outlined on my Sept. 25, 2006 entry on this blog, the USPS NCOA system could provide an effective entrance key for designing a securable procedure that all financial institutions should use in identifying customers. This would also be effective in promoting homeland security. The government and the new Obama administration should take advantage of the “opportunity” offered by the bailouts to require financial institutions to schedule and complete projects related to due diligence in properly identifying customers.

1 comment:

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