The U.S. Senate Banking Committee may review key credit card industry and bankruptcy reform measures during November 2008 hearings.
“The credit card reform area is one that’s been screaming for attention for a long time,” Sen. Christopher Dodd, chairman of the Senate Committee on Banking, Housing and Urban Affairs told reporters in Washington, D.C. “The fees that have been charged in the last few years have raised billions of dollars at the expense of consumers, many of whom are only meeting their minimum monthly payments and not being able to pay off the tremendous amounts of debts they owe.”
In a statement released late Tuesday, the Connecticut Democrat said he plans to include credit card reform as well as bankruptcy law reform in a package of consumer protection measures he hopes to schedule during special hearings in November or when Congress returns from winter break in January under a new administration.
The Senate banking committee will play a key role in overseeing how the U.S. Treasury Department, Federal Deposit Insurance Corp. and Federal Reserve Board administer the $700 billion Wall Street bailout plan approved by Congress and signed into law earlier this month.
Dodd said the law, called the Emergency Economic Stabilization Act, should not stop at Wall Street. “Our work isn’t done until we have focused on the financial health not only of the American financial sector but also of the American consumer.”
Four key measures
Here’s what Dodd had to say about tackling four key areas:
- Credit card reform. “To avoid future economic crises, we must reform credit card marketing and billing practices.”
- Bankruptcy reform. “It is irrational and unjust that a family that owns one home receives less protection under our laws than a family that owns two or more homes. The average American homeowners should be able to seek protection of bankruptcy court to save his or her home.”
- Predatory lending. “The Federal Reserve’s rules barring unfair and deceptive mortgage lending practices are a step in the right direction. We need additional legislation to stop these practices, which have triggered the greatest financial crisis in at least eight decades.”
- Mortgage foreclosures. “We should declare a temporary moratorium on foreclosures so that lenders, servicers and homeowners can come together to try to restructure their loans on terms agreeable to all.”
Added Dodd: “In my opinion, no stimulus legislation that Congress takes up, and no regulatory modernization proposal that we draft, will be complete and adequate unless they contain these four essential components.”
The U.S. House of Representatives passed landmark credit card legislation — the Credit Cardholders’ Bill of Rights — on Sept. 23. Observers had said a Senate version of the bill was unlikely — but that was before Wall Street’s financial meltdown and the taxpayer bailout. Added Dodd: “I think in light of the events in the last few weeks, there’ll be a greater, I think, interest in doing something about this.”
Critics of credit card reform have said that lawmakers would be duplicating efforts already under way by the Fed to curb unfair and deceptive practices. New rules limiting surprise interest rate hikes and fees and requiring greater disclosure of credit card terms are expected to be finalized by the end of the year. A Fed spokeswoman confirmed Wednesday that the timetable for final rules has not been delayed because of the Wall Street bailout efforts.
Dodd and fellow Democrat Sen. Carl Levin co-sponsored credit card legislation in July: the Credit Card Accountability, Responsibility and Disclosure Act of 2008 or Credit CARD Act of 2008. Dodd said laws rather than regulatory rules are needed to address credit card industry problems. “While some may say this is somewhat duplicative, a regulation or rule can be changed rather quickly — a law cannot.”
Levin issued a statement supporting Dodd’s efforts to make credit card reform an issue in November: “The American people are shelling out hundreds of billions of taxpayer dollars to make up for Wall Street excesses; Wall Street banks should not be allowed to squeeze more dollars from consumers through unfair credit card practices that mire families in debt.”
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See related: U.S. House passes landmark credit card bill, State by state bankruptcy map, Tips for those considering bankruptcy, Bankruptcies creeping upward as economy sours, Fed backs rules to curb deceptive credit card practices, Proposed credit card rule draws massive response