Credit Card Accountability Act Reintroduced in Senate. Demos Calls for Swift Enactment of Protections for Besieged Credit Card Customers
WASHINGTON -- This week, Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing and Urban Affairs, re-introduced The Credit Card Accountability, Responsibility and Disclosure Act ("the Credit CARD Act"). The legislation would outlaw several abusive lending practices in the credit card market. Tamara Draut, Vice President for Policy and Programs at Demos, a non partisan policy center that supports legislative measures to re-regulate the credit card industry and bolster the household economy, issued the following statement on the legislation:
"America’s families are facing a dire economy, and this bill couldn’t come at a better time. As the consequences of the subprime meltdown spread, banks are openly increasing interest rates and fees on their credit card customers in order to cover losses in other areas. The only reason this is possible is because in the absence of almost any regulation, issuers have tilted the playing field heavily in their favor.
"The Credit CARD Act would level the playing field between borrower and lender by putting an end to some of the most arbitrary, abusive, and unfair credit card lending practices that trap consumers-particularly disadvantaged and minority borrowers-in an unending cycle of costly debt. The bill would:
* Protect consumers from "any time, any reason" interest rate increases and account changes;
* Prohibit unfair application of card payments;
* Protect cardholders who pay on time;
* Limit fees and penalties;
* Ensure that cardholders are informed of the terms of their account; and
* Protect young consumers from credit card solicitations.
"Demos research shows that inequitable credit card underwriting practices have shifted the cost of credit to individuals least able to afford it, while at the same time generating some of the highest profits in the entire banking sector. Low-income families and households of color, primarily African Americans and Latinos, bear the brunt of the cost of credit card deregulation through excessive fees and high interest rates.
"Last fall, a similar measure known as H.R. 5244 in the 110th Congress, was passed overwhelmingly by the House of Representatives in September 2008 with bipartisan support-a vote of 312 to 112, with 84 Republicans joining Democrats to support the bill Unfortunately, the Senate did not have time to take up the bill before the end of the legislative session. Although the Federal Reserve and other bank regulators issued a rule in December 2008 that would prohibit many of the same unfair practices, the rule does not take effect until July 2010, giving credit card companies 18 months to proceed unchecked and delaying relief for millions of American consumers. The legislation introduced this week would establish important protections in the midst of the worsening economic crisis.
"Now that our regulating agencies have acknowledged that credit card issuers need to be brought back into line, it is up to Congress to stand up for beleaguered consumers. We look forward to working with members of the House and the Senate to speed relief to millions of Americans struggling to stay afloat in the midst of recession."
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