Wednesday, April 30, 2008
Credit Card Accountability, Responsibility and Disclosure Act
nMove over predatory mortgage lenders. The new black sheep on Capitol Hill are credit card companies. Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs and Sen. Carl Levin (D-MI), who heads a Senate Homeland Security and Governmental Affairs subcommittee that looked into the credit card industry's lending practices, are sponsoring a bill which targets credit card billing, marketing and disclosure practices.
The Credit Card Accountability, Responsibility and Disclosure Act (the C.A.R.D. Act) is aimed at stopping credit card practices that drag consumers into staggering amounts of debt. The CARD Act will strengthen the credit card industry’s regulation and oversight, and prohibit unfair and deceptive practices such as universal default and double-cycle billing.
At a news conference organized to discuss the bill, Elizabeth Warren, Leo Gottlieb Professor of Law, Harvard Law School said that “Senator Dodd says it is time to change the rules of the credit card game. For everyone who has been tricked or trapped by a credit card agreement that is impossible to understand, this is powerful news. The CARD Act could save families more than a billion dollars each year by cutting out the most unfair of the penalty fees and sky-high interest rates. Families need this help, and I am proud to stand behind Senator Dodd’s efforts to provide it.” Read the full press release.
More details from the Associated Press via CNNMoney.com. A similar bill [H.R. 5244, the Credit Cardholder's Bill of Rights] proposed by Rep. Carolyn Maloney (D-N.Y) [co-sponsored by House Financial Services Committee Chairman Barney Frank], is pending in the House. At the same time, the Federal Reserve, the Treasury Department's Office of Thrift Supervision and the National Credit Union Administration, are planning to propose similar curbs on credit card practices _ efforts that also have the card issuers in defense mode. Five financial companies _ Discover Financial Services LLC, Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Capital One Financial Corp. _ issue around 80 percent of U.S. credit cards, according to congressional investigators.
Reuters report says that the industry quickly went on the offensive and again warned that legislation would result in "unintended consequences" such as higher costs for credit card holders, including those who manage their credit well.
So why is all this suddenly so important? More important than piling on mortgage lending scoundrels, I mean. According to this article on the Lenderama mortgage industry blog, Capital One says that 2/3 of their customers who are 90 days or more delinquent on their mortgages are still current on their credit cards.
So the increasing spotlight on card companies might have something to do with the fact that since home equity lines have dried up and there's no more easy spending money to be extracted from mortgages, people are defaulting mortgage payments, and instead preferring to take up more revolving credit from card companies. It's all about following the money. And Congress does that better than anyone else, save the IRS.
The Credit Card Accountability, Responsibility and Disclosure Act (the C.A.R.D. Act) is aimed at stopping credit card practices that drag consumers into staggering amounts of debt. The CARD Act will strengthen the credit card industry’s regulation and oversight, and prohibit unfair and deceptive practices such as universal default and double-cycle billing.At a news conference organized to discuss the bill, Elizabeth Warren, Leo Gottlieb Professor of Law, Harvard Law School said that “Senator Dodd says it is time to change the rules of the credit card game. For everyone who has been tricked or trapped by a credit card agreement that is impossible to understand, this is powerful news. The CARD Act could save families more than a billion dollars each year by cutting out the most unfair of the penalty fees and sky-high interest rates. Families need this help, and I am proud to stand behind Senator Dodd’s efforts to provide it.” Read the full press release.
More details from the Associated Press via CNNMoney.com. A similar bill [H.R. 5244, the Credit Cardholder's Bill of Rights] proposed by Rep. Carolyn Maloney (D-N.Y) [co-sponsored by House Financial Services Committee Chairman Barney Frank], is pending in the House. At the same time, the Federal Reserve, the Treasury Department's Office of Thrift Supervision and the National Credit Union Administration, are planning to propose similar curbs on credit card practices _ efforts that also have the card issuers in defense mode. Five financial companies _ Discover Financial Services LLC, Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Capital One Financial Corp. _ issue around 80 percent of U.S. credit cards, according to congressional investigators.
Reuters report says that the industry quickly went on the offensive and again warned that legislation would result in "unintended consequences" such as higher costs for credit card holders, including those who manage their credit well.
So why is all this suddenly so important? More important than piling on mortgage lending scoundrels, I mean. According to this article on the Lenderama mortgage industry blog, Capital One says that 2/3 of their customers who are 90 days or more delinquent on their mortgages are still current on their credit cards.
So the increasing spotlight on card companies might have something to do with the fact that since home equity lines have dried up and there's no more easy spending money to be extracted from mortgages, people are defaulting mortgage payments, and instead preferring to take up more revolving credit from card companies. It's all about following the money. And Congress does that better than anyone else, save the IRS.
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