Today, President Barack Obama is meeting with executives from the credit card industry, in order to advocate “more legal protection for the millions of Americans who use credit cards.” As CBS reported, “the credit card issuers include the same big banks – Bank of America, Citicorp and JPMorgan Chase – that have gotten billions in bailout money meant to stimulate consumer lending.” Other participants reportedly include representatives from Capital One, Visa, and Mastercard.
This comes one day after the House Financial Services Committee approved legislation aimed at curbing abusive practices employed by credit card issuers:
The House measure would restrict card companies’ ability to raise rates on existing customers and ban certain controversial practices, such as applying payments to the portion of a borrower’s balance with the lowest interest rate. It would also bar issuers from charging interest on parts of the balance that were already paid on time, a practice known as double-cycle billing.
The committee vote was 48-19, with 9 Republicans joining all voting Democrats in supporting the measure. 19 Republicans voted against it. The bill (HR 627) will now move to the House floor, where it is expected to pass.
However, according to the New York Times, the proposal is “in jeopardy because of lobbying by banks and their trade groups, particularly in the Senate.” “Having won some early skirmishes by teaming with Republican allies, the banks now appear to have the upper hand and may wind up killing — or at least substantially diluting” the measure, the Times noted.
As Chris at Americablog wrote, “there’s no question more consumers could have been smarter about how they deal with easy credit, but the same could also be said about Wall Street, yet they received a fat bailout.” And as TARP watchdog Elizabeth Warren pointed out, bailed out banks hiking rates and fees amounts to “asking taxpayers to pay twice.”
Indeed, there’s plenty of blame to go around when it comes to the amount of debt Americans are carrying, but that doesn’t mean that curbing abuse is any less important. In fact, the Federal Reserve was planning to implement many of these reforms anyway, and one of the reasons that industry is so concerned by the House’s bill is that “it believes a law would be harder to overturn than a [Federal Reserve] regulation.” So if given the chance, will the Senate vote to protect consumers, or will it bend to the will of bailed out banks?
Robert Reich has more on “the great credit card battle to come.”