Anglo-American Credit Scoring and Consumer Debt in the Subprime Mortgage Crisis of 2007 as Models for Other Countries?

  • Thomas Fay Ruddy EMPA Swiss Federal Labs.
Keywords: surveillance, credit risk, regulation, credit scoring, privacy


The system of credit scoring has been built up in recent times on the basis of a compromise struck between individuality and surveillance in ways that boosted consumption through consumer debt. This paper considers the role of credit scoring in the recent financial crisis, concluding that even if credit scoring had worked as intended under its own terms, the practice would not have been enough to limit the defaulting of mortgage borrowers under conditions of falling house prices. The broader economic problem is the crippling amount of consumer debt involved; hence the paper places credit scoring in the larger explanatory framework of consumer debt and, more generally, consumerism in its more problematic form. The sorting accomplished by credit scoring is open to abuses in the marketplace, unless it is tempered by the application of guardrails by a regulatory authority. As cultures beyond the Anglo-American sphere adopt this practice, guardrails like those applied to credit scoring in America are needed; as even the current U.S. Administration has acknowledged, the existing guardrails will have to be complemented by stricter social standards. The paper provides a derivation of the theoretical background on credit scoring as surveillance, and includes a literature survey.


Author Biography

Thomas Fay Ruddy, EMPA Swiss Federal Labs.

Thomas Ruddy is an American who came to Europe as an exchange student and lived in Vienna, Austria, where he learned German. In 1971 he moved to Germany to work on translations of research sent as educational aid to developing countries. Soon after the fall of the Berlin Wall he met E.-U.von Weizsaecker and organized a conference on generating electric power for the East in less damaging ways. Later he experienced life in the former East Germany while working at Saxony Development Corp. for Telematics in Leipzig and on a civil-society initiative to define a way to the Information Society for all of Germany that could be reconciled with sustainable development. His involvement in telematics included work on RFID and privacy. After 2000 he taught International Political Economy at the Solothurn University of Applied Sciences, Olten, and Webster University Geneva Campus, Switzerland. Since 2002 he has been working on a part-time basis as a researcher at Empa Swiss Federal Laboratories for Materials Testing and Research in St.Gallen Switzerland, where his research has focused on the nexus of international trade and sustainable development, especially with regard to the European policy-making arena. His best known paper is coauthored with Lorenz Hilty and entitled: Impact assessment and policy learning in the European Commission

Special Issue: Capitalist Crisis, Communication, & Culture