The Federal Reserve, the Office of Thrift Supervision, and the National Credit Union Administration issued new credit card regulations last week, to both applause and criticism. The rules impose some strict new limits on card issuers, including a ban on universal default and double-bill cycling, and a host of restrictions on fees. The American Bankers Association was generally supportive. In a formal statement, ABA president and CEO Edward L. Yingling called the disclosure requirements a “dramatic improvement over the existing legalistic disclosures.”
But the group cautioned that the new regs may increase costs for most cardholders and reduce credit availability. “With the uncertainty facing our financial system, it’s absolutely vital for policymakers to understand the full impact of these regulations on consumers and the economy before judging their success or further restricting the marketplace,” Yingling said.
Meanwhile, Citizens for Equal Access to Credit–CEAC—sharply criticized some of the rule changes. The group, which represents minority and small business advocates, as well as providers of issuers of low-limit credit cards, promised to campaign for changes in rules it says limit credit availability to those unable to qualify for prime credit cards, including the rule prohibiting issuers from financing cardholder first year security deposits or fees. Javier Cuebas, executive director of CEAC, warned that the new regimen “could leave them with no options to safely improve their credit score.” CEAC will focus on any Senate and/or House bills introduced in the new Congress that “eliminates the ability of an issuer to price according to risk or would make credit less availability to underserved communities,” promises CEAC spokesperson Ernest C. Baynard.
Senator Chris Dodd (D-CT) is already weighing in with plans to introduce the Credit Card Accountability Responsibility and Disclosure Act next year, which would include a ban on late fees and overlimit fees and add a long list of disclosure requirements.