Prime, Subprime, Deep Subprime, Suprime-Like . . . and hold it, my f...

What's in a name? A lot of heartache, potentially, as Johnny Cash explained in A Boy Named Sue.

The consumer finance industry is awash in labels for lending. Despite the lack of data, and clear analysis, that left certain people (apparently nearly all of Wall Street) surprised about the housing crisis, the lending industry is still defining success for itself. Kevin Wack at American Banker examines the "slippery" definition of subprime, giving examples of Equifax recalibrating the "subprime" and "deep subprime" labels to different places on the credit score range. The result: instantly, the percentage of subprime auto loan originations falls from 36% to 28%.

Labels themselves do not predict default risk (we hope the actual underwriting, including credit score, does that work). But labels do matter. Consistent use of problems such as "prime" and "subprime" help government and researchers study trends and make consistent, reliable determinations about markets. They make sure that different regulators are looking at the same group of loans, and they help the public evaluate their credit standing.

Maybe this is a project for the Financial Stability Oversight Council, which devoted one-page to consumer protection in its 100-page 2015 report. In what I take as a sign that FSOC should tackle this issue, there is even a heading on "Data Gaps."