Tuesday May 12, 2009, 11:48 AM
WASHINGTON - This isn't the easiest time to be CEO of a credit card company. And that's just fine with many members of the Senate, including Oregon's Jeff Merkley.
"Up until now, the credit card industry has been an industry of tricks and traps,'' Merkley said at a morning news conference as debate on credit card reform was resuming on the floor.
Merkley has cast himself as a consumer populist and the credit card bill has given him his first opportunity to contribute in a significant way to high-profile legislation.
Even so, Merkley's words weren't the toughest on the industry and its alleged sins. Banking Committee Chairman Chris Dodd said credit card companies do little more than "try to trap consumers'' with soaring interest rates and fees.
Sen. Carl Levin, D-Mich., said, "abuses are legion'' and Sen. Robert Menendez, D-N.J. said credit card agreements are "booby-trapped.''
Even Republicans are expressing those sentiments, albeit with kinder words. "Credit card contracts are unclear, at best, and thoroughly confusing at worst,'' Sen. Richard Shelby, R-Ala., said from the Senate floor Tuesday. He is the ranking member on the Banking Committee and wrote the compromise bill with Dodd.
He is generally considered a friend of bankers, but when it comes to credit cards, the industry is portrayed as a villain.
"Credit issuers raise rates for unclear reasons, use billing methods that consumers do not understand and assign fees and charges without warning,'' Shelby said from the floor. "This bill seeks to remedy this.''
The Senate is working to pass new regulations on credit cards that give consumers more rights and protections as well as better disclosure of credit card agreements, the villain was easy to find.
"This is a way to put an end to that legacy,'' Merkley said of a bill that is expected to pass. President Obama said he would like to sign legislation into law by the end of the month. The House passed a separate version of the bill 357-70 on April 30 that is not as muscular as the version before the Senate. The differences between the two bills will have to be resolved before a final version can go to the White House for Obama to sign.
Efforts to crack down on the credit card industry are broadly popular, as reports about excessive fees and interest rate hikes for good customers has fed anger that the card companies are taking advantage of contracts that give them nearly unlimited authority to change terms at any time for any reason.
The bill would prohibit lenders from increasing interest rates on past buys unless the cardholder has fallen at least 60 days behind. At the same time, lenders would be required to review a cardholder's terms every six months.
Other provisions in the bill would:
• Require anyone under 21 to prove that he or she can repay the money before being given a card, or have a parent or guardian promise to pay off the debt if he or she defaults.
• Require lenders to give customers 45 days notice before increasing rates and mail their bills 21 days before the balance is due.
• Ban fees if customers want to pay their bills by phone or online.
• Prohibit over-the-limit fees unless a cardholder elects to be allowed to go over their limit.
• Require lenders to say how much time it would take and how much money in interest would be paid if only the minimum monthly payments are made.
• Require that gift cards remain valid for five years.
Democrats -- particularly Dodd who faces a tough re-election fight next year -- have clung to credit card reform as an easy way of providing voters a tangible benefit in the economic downturn.
Obama is expected to focus on the issue at a town hall meeting in Albuquerque, N.M., this week. He has said that while free-flowing credit is important, "we can't tolerate profits that depend upon misleading working families."The banking lobby is pushing back. The American Bankers Association warned senators in a letter today morning that the measure could restrict credit at a time when Americans need it most.
Source : http://www.oregonlive.com/politics/index.ssf
