WASHINGTON - Reps. Barney Frank and Carolyn Maloney, two leaders of the House Financial Services Committee, made it clear Monday that they are moving forward on legislation targeting certain credit card practices, including retroactive rate increases, mandatory arbitration, and disclosures.
Rep. Maloney, who chairs the panel's financial institutions subcommittee, hosted a private roundtable with 10 consumer groups and six top issuers, including representatives from Citigroup Inc., JPMorgan Chase & Co., and Bank of America Corp. The New York Democrat said she would use information from the roundtable to craft a set of principles that would form the blueprint for legislation later this year.
"We discussed a set of principles that can serve as a guide to both legislation and self-regulation by the industry," she said at a press conference after the roundtable. "These principles recognize that the modern risk-based pricing credit card system requires a shared responsibility between credit card issuers and their customers."
Details of the principles, which she said would be released this week, are still being worked out, but a
In her agenda, Rep. Maloney said that issuers should issue unsecured credit on terms the individual can repay, explain account features, terms, and pricing clearly, and provide customers control over their accounts, including the ability to opt out of a change to the card agreement. Issuers also should "deploy specialized strategies" to help consumers who are new to credit cards and ensure that "resolution mechanisms" are "unbiased and accessible."
Participants in the roundtable, which lasted about two hours, said they touched on all five of these topics as well as others. During the roundtable Rep. Frank, who chairs the House Financial Services Committee, was particularly concerned about mandatory arbitration and retroactive rate increases, several participants said.
In a brief interview after the roundtable, Rep. Frank said that he expects his committee to host at least one more credit card hearing in September, and that legislation would likely be introduced in October. The details are still being worked out, he said.
Rep. Spencer Bachus of Alabama, the panel's lead Republican, has said "publicly and privately that he wants to legislate," Rep. Frank said. "Spencer has been very outspoken on the need to legislate."
The committee's final legislation would not be finalized until any hearings are complete, Rep. Frank said.
"I don't think you'll see a bill shape up until after the hearing," he said. "We are talking about some principles now, and this is one where there is a lot of general interest, general input."
But Rep. Michael Castle, R-Del., who also participated in the roundtable, said he was not sure legislation was needed. Several large issuers have changed practices on their own, and proposed improvements to disclosures under the Federal Reserve Board's recent review of Regulation Z, which implements the Truth-in-Lending Act, might be adequate to change practices, he said.
Representatives from Citi, JPMorgan Chase, B of A, Capital One Financial Corp., American Express Co., and Discover Financial Services LLC, would not discuss the meeting afterward with reporters. But consumer group participants said the banking industry representatives did not seem to favor changes besides improved disclosure.
"I was a little disappointed that there was this presumption that the bad practices only occur in the little issuers. We get complaints about these big issuers, too. I think they need to look more at their own operation, because … I think they're out of touch," said Ed Mierzwinski, the consumer program director with the U.S. Public Interest Research Group.
