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April 21, 2009

Merkley to Obama: Endorse Senate's Credit CARD Act

From a Press Release this afternoon:

Merkley: White House Should Endorse Senate Credit CARD Act

Oregon’s Senator Urges White House to Support
Sweeping Credit Card Protections for Consumers

Washington, DC – As President Barack Obama prepares to meet with executives from credit card companies later this week, Oregon’s Senator Jeff Merkley is urging the Administration to support sweeping credit card legislation being considered in the Senate.

Millions of working Americans are struggling to get by and pay the bills, yet credit card companies are ambushing consumers with surprise interest rate hikes and hidden fees. In response to these abusive practices, Merkley today wrote to Larry Summers, Chair of the National Economic Council, urging the White House to use the Thursday meeting as an occasion to publicly endorse Senate efforts to end deceptive credit card practices.

“Misleading or abusive practices drain wealth from the middle class at the very time we need to be doing more to strengthen working families. Right now, credit card companies have the power to change the terms of agreements at any time, for any reason, trapping cardholders in high rates and a cycle of debt,” said Merkley. “The Senate Banking Committee has already taken important steps to end these unfair practices by passing the Credit Card Accountability, Responsibility and Disclosure (CARD) Act. I applaud President Obama for drawing attention to an area in desperate need of strong reform and hope he will join the Senate effort to pass the Credit CARD Act.”

While the Federal Reserve has issued new regulations addressing some of the worst abuses, those reforms would not go into effect until July 2010 – too late for many consumers who are already deeply in debt because of the economic crisis. The Credit CARD Act would both speed up and strengthen reforms of the industry by enacting protections including:

• A broad prohibition on “universal default,” the practice of raising interest rates on a consumer for actions unrelated to the card in question;


• A requirement that payments beyond the minimum monthly payment be applied to balances with the highest rate of interest;


• Prohibitions on fees based on the method of payment, be it telephone, mail, internet, or otherwise;


• A requirement that fees be reasonably related to the costs incurred;


• A cap on over-the-limit fees to once per billing period;


• A prohibition on charging interest on fees;


• A requirement to remove penalty rates following six months of good behavior; and


• Limits on the aggressive solicitation of young persons.

“If there’s one thing we’ve learned from the financial crisis, it’s that we cannot rely on voluntary compliance and the goodwill of banks to protect consumers. What is voluntarily given can be voluntarily taken away,” said Merkley. “Instead we need real reforms that are grounded in law and backed by strenuous oversight. These are common sense protections that will help keep middle class Americans out of debt.”

I agree!

Posted by Kevin at April 21, 2009 06:07 PM