WASHINGTON – Key congressional backers of a 2009 law that strengthened consumer protections for credit card users are now concerned that the Federal Reserve Board has gone too far with regulations that could restrict credit to stay-at-home mothers.
In a letter, Democratic Reps. Carolyn Maloney, Louise Slaughter and Barney Frank are asking the Consumer Financial Protection Bureau to conduct a study of a Fed rule that took effect on Oct. 1. Rep. Spencer Bachus, the Republican chairman of the House Financial Services, also signed the letter.
The rule requires that all credit card customers demonstrate an independent ability to pay. In January, retailers such as Home Depot Inc., David's Bridal Inc. and Dress Barn Inc. argued against the then-proposed Fed rule that such a policy would disqualify a huge target audience for their store cards–stay-at-home moms who lack independent income.
According to the lawmakers, the Fed rule runs counter to the 2009 Credit CARD Act, which established two standards on the ability to pay–one for young consumers, such as college students, and another for everyone else.
Some card issuers are reporting that the new Fed rule may be having a negative impact on the ability of stay-at-home mothers, who do not have their own incomes, to access credit, the lawmakers said.
“We need to make sure that women are not subject to credit denials because of a misreading of the law,” Maloney, the 2009 law’s House sponsor, said in a press release. “Nonworking spouses must continue to have access to credit using household income, and the [Consumer Financial Protection Bureau] has the tools to tell if that is happening."
The Fed agrees that a study would be useful to assess any unintended consequences of its new rule, the lawmakers said. They are asking the bureau to conduct an extensive review of the potential impact the rule is having on access to credit.
