Credit Card Reform Deal In Senate
Senate Banking Committee leaders have reached a compromise deal on credit card reform.
The House has passed a credit card reform measure that mirrors new rules passed by the Federal Reserve in December. The (Chris) Dodd bill offers stronger consumer protections than the House bill and the Federal Reserve rules. The Fed's regulations won't go into effect until July 2010. The Senate bill's protections would be enacted nine months after being signed into law.
Dodd had sought to ban all interest rate increases on existing balances. Under the compromise bill, card issuers would be allowed to retroactively bump up rates for any borrower whose payments are 60 days past due. However, if the borrower pays on time for six months, the card issuer would have to restore the original rate. The bill also prohibits card issuers from increasing rates during the first year a credit card account is opened and requires them to get customers' permission to set up accounts so that transactions over the limit can be processed. Another provision would require card issuers to post credit card agreements online.
"It's a meaningful compromise that will significantly improve the credit card marketplace and stop abusive practices," said Travis B. Plunkett, legislative director of the Consumer Federation of America.
Getting Richard Shelby's signoff early strongly improves the possibilities for the bill, even while the banksters lobby against it. Just by virtue of being more real for most Americans, it will be harder for the Congress to walk away from this. It's rare to see a stronger bill coming out of the Senate than the House, but that's the case here.
And let's not diminish the significance of the Chris Dodd credit card reform bill getting signed into law. He'll need help like this to win re-election.