rssDodd Bill Would Freeze Credit Card Rates
Monday, October 26, 2009 at 1:25 pm
- 22 Comments
Attempting to fix a problem that his panel helped create, Senate Banking Committee Chairman Chris Dodd (D-Conn.) will introduce legislation today to prevent credit card companies from hiking rates on existing balances. Although Congress passed sweeping credit card reforms earlier in the year — including a ban on retroactive rate hikes — the banking lobby was successful in convincing Democratic leaders to delay those changes, most of which don’t take effect until February. Many banks have taken advantage of the delay, hiking rates on existing balances in order to get in under the reform deadline.
“[N]o sooner had it been signed into law, but credit card companies were looking for ways to get around the protections this Congress and the American people demanded,” Dodd said in a statement. “This bill would end those abuses and further protect customers today.”
But Dodd’s bill, by carving out the retroactive rate-hike reform, doesn’t go nearly as far as several separate proposals to expedite all of the credit card reforms passed earlier in the year. The House Financial Services Committee approved that legislation last week, and an identical Senate bill appeared the same day.
Calls and emails to Dodd’s office seeking comment on the larger expedited reform bill were not returned last week. His newly introduced proposal explains why.
22 Comments
Pingback posted October 26, 2009 @ 1:35 pm
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Comment posted October 26, 2009 @ 5:39 pm
HR 627, anti-predatory legislation was blamed by TelCom Credit Union as the reason for eliminating my fixed rate credit card, increase the rate (at the worst economic time since the depression) and increase the fees (but pay me less than 1% on my savings). When I asked about it, they said the legislation was passed hastily, with vague language that allowed these institutions to get their money through the loopholes. In other words, my credit union of 26 years blatantly flipped off the anti-predatory legislation to become predators.
Hello? Don't you legislators know that legislation the size of a phone book is full of loopholes so nothing actually gets accomplished? Why don't we get more general. Lets make “predatory” practices illegal, and “deception” and “harmful product/service”…. Let's make our judges JUDGE. Instead of awarding cases to who can hire the best attorney to intrepret existing law most favorably, let's look at specific practices and judge them on general values, like honesty, quality, fairness.
Pingback posted October 26, 2009 @ 6:47 pm
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Comment posted October 26, 2009 @ 9:08 pm
An immediate freeze on interest rates for existing credit card balances until February is meaningless. Congress has to pass comprehensive, standardized, simplified, and transparent credit card reform legislation.
The average interchange fee in the U.S. is seven times the interchange fee set by Visa and MasterCard in countries throughout the rest of the world. Using 2008 figures, if the interchange fee charged by credit card issuers was decreased (via comprehensive credit card reform legislation) from the current 2.10% to 0.60%, the result would be an annual savings of approximately $34.3 billion for U.S. merchants and consumers. Credit card issuers could retain 0.3% as a processing fee, the remaining 0.3% could be a “tax” used to fund a Natural Disaster Trust Fund (NDTF). In 2008, this would have generated $6.86 billion in funding for a NDTF.
Let's be clear. The interchange fee is a hidden tax, just not a tax subject to political control or for which there is any discernible social benefit. Decreasing, and imposing a transparent tax on, the interchange fee would have the same stimulus effect of a tax break, but without an impact on the federal budget.
The following article discusses how comprehensive, standardized, simplified, and transparent credit card reform legislation may fund a Natural Disaster Trust Fund.
http://www.csnews.com/csnews/images/pdf/creditc…
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Pingback posted October 27, 2009 @ 4:57 am
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Pingback posted October 27, 2009 @ 8:52 am
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Pingback posted November 8, 2009 @ 6:47 pm
[...] Dodd Bill Would Freeze Credit Card Rates « The Washington House Passes Bill to Expedite Credit Card Reforms; Reid Trying to Expedite Bill to Expedite Credit Card Reforms; Push to Expedite Credit Card Reforms Gains Momentum [...]
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