Congress Plans Credit Card Reforms
WASHINGTON – The new Democratic-controlled Congress began a series of hearings on the credit card industry yesterday which are expected to result in legislation that will reign in some of the practices of credit card issuers, increase consumer disclosures and possibly regulate the multi-billion dollar market for interchange fees paid by merchants, issuers and consumers. Democratic members of the Senate Banking Committee made it clear they plan to revisit some of the issues swept aside by the Republican-controlled Congress during the debate over bankruptcy reform, which was led by the credit card industry.“I would like to put the credit card industry and the issuing banks on notice, that we’re going to take a long, hard look at how you treat your customers, both short and long-term,” said Connecticut Sen. Christopher Dodd, the new Chairman of the panel, who made it clear earlier in the week that populist issues like credit card abuse will be central to his fledgling campaign for president. Several senators indicated they plan to introduce legislation to set new standards for credit card disclosures and fees and banning certain practices, like universal default with which cardholders have their rates raised because of default on another debt. Democrat Daniel Akaka, of Hawaii, criticized the disclosures included in the bankruptcy reform law and said he will introduce a bill setting new rules disclosing the affects of minimum monthly payments. And New Jersey Democrat Robert Menendez, has introduced a ‘Credit Card Bill of Rights’ that would, among other things, prohibit universal defaults; restrict excessive late fees and tighten regulations on credit card companies to ensure that they are not offering credit to high-risk cardholders without verifying their ability to pay. Several Republicans also warmed to the issue, with New Hampshire’s John Sununu suggesting that Congress stiffen penalties for issuers found to engage in fraudulent practices.