Did John Paulson or Goldman Sachs violate the Fair Credit Protection Act by using the consumer credit ratings known as FICO scores to structure the synthetic derivative at the center of the Securities and Exchange Commission's case against Goldman? A lawyer, Avery Goodman, writes at Seeking Alpha:
Such information may only be used with respect to specifically defined "permissible purposes." Permissible purposes include those events that somehow involve or benefit the original borrower in some way. The borrower must either be applying for or receiving credit, or someone must be doing something, in the chain of contract, to facilitate the borrower's ability to receive credit, such as creating, buying or selling an existing loan.