Senator sees credit card action this year: 02/11/08
By John Poirier, Reuters, 02/08/2008
Congress is likely to move toward final legislation this year to reform often-criticized marketing and billing practices by credit card companies, a senior U.S. lawmaker said on Friday.
“I am hopeful that there will be action in both houses,” Sen. Carl Levin, who chairs the Senate Permanent Subcommittee on Investigations, said at the Reuters Regulation Summit in Washington.
“That would mean conference,” a meeting of senators and representatives to iron out differences between their bills after their respective chambers pass legislation, he said.
Levin, a Michigan Democrat, is critical of credit card companies, saying their billing practices sometimes blindside unsuspecting cardholders who become trapped in a mountain of exorbitant charges.
Amid growing frustration among consumers and some lawmakers, Levin’s panel has held hearings to examine industry practices, and he has introduced legislation to change them.
However, the Senate Banking Committee, which has jurisdiction over financial services companies, would need to introduce its own legislation on credit card reform.
The banking committee’s chairman, Christopher Dodd, pledged last month to “soon” offer legislation that would address concerns about industry marketing and billing practices.
“I am hopeful that legislation will be coming out of the banking committee this year,” Levin said at the summit.
In the House of Representatives, New York Democrat Carolyn Maloney on Thursday introduced a credit card reform bill backed by the chairman of the House Financial Services Committee. Maloney said the House bill was balanced between consumers and companies, but bans “major industry abuses.”
The proposed House legislation does not set a cap on interest rates, limit fees or impose price controls. But it would require card issuers to notify consumers 45 days ahead of changes to the terms of the account, instead of the current 15-day minimum — a provision that could reduce companies’ revenues.
“I haven’t read the bill but I understand it’s a heck of a bill,” Levin said. Card issuers warn that restrictions on their business could increase their costs and further tighten credit at a time of economic weakness.
Among the biggest issuers of Visa and MasterCard Inc (MA.N: Quote, Profile, Research) credit cards are Bank of America (BAC.N: Quote, Profile, Research), JPMorgan Chase (JPM.N: Quote, Profile, Research), Citigroup (C.N: Quote, Profile, Research), Capital One Financial (COF.N: Quote, Profile, Research) and Discover Financial Services (DFS.N: Quote, Profile, Research). American Express (AXP.N: Quote, Profile, Research) also issues cards. Last year, the Federal Reserve proposed changes to disclosure rules for areas spanning new business solicitations to monthly statements in an effort to help consumers better understand fees and rates. (For summit blog: summitnotebook.reuters.com/) (Reporting by John Poirier)