Dems: New Credit Card Regs Are No Substitute for Legislation
After months of proposals, arguments, hearings and public comments, federal regulators today approved new rules to make credit cards more consumer friendly. The changes will prevent card companies from hiking interest rates on existing balances and grant card users a longer window to pay their bills. The new rules take hold in July 2010.
Some Democrats aren’t impressed.
Sen. Carl Levin (D-Mich), who heads a Senate investigative panel, issued a statement this afternoon saying the regs are “a good first step” but don’t go nearly far enough to rein in the industry’s abusive practices:
The regulations regrettably leave in place many blatantly unfair credit card practices that mire families in debt. Legislation is needed to stop abuses such as charging interest on debt that was paid on time, pay-to-pay fees, and universal default.
Rep. Carolyn Maloney has such a bill. In a statement released today, the New York Democrat applauded the Fed’s changes, but said they won’t come quickly enough to help consumers during the recession. “Congress should act sooner to protect American consumers by giving credit card protections the permanence and force of law,” she said.
Republicans had opposed Maloney’s bill, largely on the grounds that federal regulators were working to craft similar changes. During numerous hearings on the proposal, they claimed that Congress should wait for those regs to arrive before pushing forward with legislation — a notion soundly rejected by Democrats.
“The notion that the legislative body should defer to the regulators gets it backwards,” Rep. Barney Frank (D-Mass.), chair of the House Financial Services Committee said during an April hearing on Maloney’s bill.
Now that the regs have arrived, Republican critics can’t lean on that wait-and-see argument any more. Still, with the banks struggling in the downturn, Maloney and her supporters might have a tough time convincing colleagues that 2009 is the right time to cut into profits further — even in the name of helping consumers.