WASHINGTON - Though Congress is unlikely to pass legislation to reform credit card practices this year, the Federal Reserve board is likely to implement some reform by year-end in response to a deluge of consumer comments on similar proposals.
The Fed has already received more than 56,000 comment letters on proposed reforms to its Regulation Z, the Truth in Lending Act, the most comments ever received by the Fed on a consumer proposal. Most of them are from irate bank and credit union customers who say their card issuers are pushing them deeper into debt.
The credit card reform bill passed last month by the House Financial Services Committee, which is opposed by the banks and credit unions, has little chance of passing this year. A similar bill is stalled in the Senate, dooming Congressional reform for the remainder of 2008.
Even if the Fed acts later this year, the issue is expected to rise again in the next Congress when the Democrats, who have introduced both the House and Senate bills, are projected to have broader majorities.
Sen. Carl Levin (D-MI), the sponsor of the Senate bill, gave a preview of what might be expected in the next Congress in a letter he sent to the Fed last week. Levin called on the Fed to expand its rules to limit such practices as charging interest for debt paid on time and interest on transaction fees.
Levin also sought an end to fees levied on consumers paying their bills on time as well as billing amounts that force consumers to pay four or five times their original debt.
The bill endorsed by the House Financial Services Committee would ban so-called double cycle billing, universal default, payment allocations and retroactive rate increases. It would also extend the required advanced notice for an increase in rates, extend the billing period and bar certain marketing practices to minors.
Leaders of the House panel rejected pleas to wait until the Fed has acted. But because the bill is not expected to be voted by the full House, they will have to wait anyway.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
