President Obama, the House Financial Services Committee and the Senate Banking Committee are all on in favor, but the prospect of imposing changes on credit-card regulations before the Federal Reserve’s new rules next July remains unclear.
The House committee action came last week, before the president’s sit-down with the credit card industry. The bill, H.R. 627, mirrors to some extent the Senate’s Credit Card Accountability, Responsibility and Disclosure Act and the Fed rules. The American Bankers Association expressed its unhappiness with the House bill. In a formal response, ABA senior vice president of card policy notes the group’s “real concerns that the bill…will have a negative effect on lenders’ ability to offer reasonably priced credit to consumers and may make matters worse for the broader economy.”
Clayton acknowledges that the committee “has generally codified sweeping new credit card rules recently adopted by the Federal Reserve, the Office of Thrift Supervision, and the National Credit Union Administration,” and says institutions are “working aggressively to implement the rules by the date set by the regulators.”
The president—and several key legislators—appear to view the sharp hike in credit card account-interest rates as worsening the already bleak economic situation. In his meeting with representatives of the credit card industry last week President Obama called for a “new equilibrium where credit is flowing,” one in which card issuers make “responsible” profits that don’t expose consumers to a “bad situation that they didn’t anticipate.” Such situations include sudden rate increases and “late-fee traps,” the president said.
In a measured statement following the White House meeting, ABA president and chief executive officer Edward L. Yingling said that the “card executives listened carefully” to the Obama’s concerns “and agreed to work with the administration to address them.” Sen. Chris Dodd (D-Conn.) and Sen. Charles Schumer (D-N.Y.) appear disinclined to wait: they asked the Fed to put the new regs into effect immediately and freeze rate hikes on customers’ existing balances. The outcome may actually depend on internal polling on Capitol Hill and at the White House.