credit card reform…
Posted by ecoshift on April 17, 2008
On the one hand it’s about time. On the other, I hope congress does better on this than they are doing protecting homeowners from foreclosure.
“Lawmakers say legislation is needed to curb many of the ‘unfair’ practices employed by credit card issuers.”
Credit card providers appear to have developed a sophisticated counter argument in defense of current lending practices, practices that would make the folks at the Bada Bing blush. To wit: “If we can’t be unfair to high-risk customers you’ll force us to be unfair to everyone. We ask you, is that fair?“
A few more details below the article…
Credit card reform moves before Congress – Apr. 17, 2008
Last Updated: April 17, 2008: 12:28 PM EDT”
“The credit card industry has come under fire from lawmakers in recent months for what some critics have labeled “unfair” practices such as raising interest rates on debt even when consumers pay on time or when their credit scores change.
The focus of Thursday’s hearing, however, was the Credit Cardholders’ Bill of Rights – legislation proposed earlier this year by subcommittee chairwoman Rep. Carolyn Maloney, D-NY.
Levin, who was among a group of 15 different witnesses scheduled to testify, introduced a similar bill in the Senate last year. If passed, the law would stop credit card issuers from charging interest rates on debt that is paid on time and require that interest rate hikes apply only to future credit card debt and not debt already incurred.
The issue has also garnered the attention of the Federal Reserve, which has proposed separate action, including requiring credit-card issuers to notify consumers at least 45 days notice if they plan on raising interest rates.
Credit card companies have argued, however, that such a law would have dire consequences on all consumers by making credit more expensive and less easily available.
“In short, if this bill is enacted, the financial burdens associated with the higher-risk customers will be spread across all customers,” said John Carey, the chief administrative officer and executive vice president of Citigroup Inc.’s credit card division.
Still, lawmakers, including Rep. Maloney, stressed the need for greater protection for consumers.”