Credit Card Accountability Act Approved by Senate Banking Committee

For Immediate Release
March 31, 2009

Contact: Tim Rusch, Demos, (212) 389-1407 or trusch@demos.org

Credit Card Accountability Act Approved by Senate Banking Committee

Demos Calls for Swift Enactment of Protections for Besieged Credit Card Customers

Washington, DC--Today, the Senate Committee on Banking, Housing and Urban Affairs approved S. 414, The Credit Card Accountability, Responsibility and Disclosure Act ("the Credit CARD Act"), a measure re-introduced by Senator Dodd (D-CT) last month. The far-reaching legislation would outlaw several of the most common abusive lending practices in the credit card market. Tamara Draut, Vice President for Policy and Programs at Demos, a non partisan policy center that supports legislative measures to re-regulate the credit card industry and bolster the household economy, issued the following statement in support of swift passage of the bill:

"This recession continues to worsen and families across the country are feeling the impact--they have little savings, millions have lost their jobs and their homes, many have taken pay and benefit cuts. The basic costs of living remain high and it is difficult for many to make ends meet. In this tough time, it is unthinkable that credit card issuers would think of tightening their grip on the household pocketbook, but that's exactly what many have done in recent months--capriciously raising fees and penalties, even as the government poured billions of dollars into them. The Banking Committee's 12-11 approval of the Credit CARD Act today offers a glimmer of hope for Americans everywhere, and would restore balance to the lender-borrower relationship that will have long-lasting effects:

"The Credit CARD Act would The bill would:

--Protect consumers from "any time, any reason" interest rate increases and account changes;
--Prohibit unfair application of card payments;
--Protect cardholders who pay on time;
--Limit fees and penalties;
--Ensure that cardholders are informed of the terms of their account; and
--Protect young consumers from credit card solicitations.

"Demos research shows that inequitable credit card underwriting practices have shifted the cost of credit to individuals least able to afford it, while at the same time generating some of the highest profits in the entire banking sector. Low-income families and households of color, primarily African Americans and Latinos, bear the brunt of the cost of credit card deregulation through excessive fees and high interest rates.

"Legislation to establish protections for credit card consumers is moving in the House of Representatives as well. Tomorrow, the House Financial Services Subcommittee on Financial Institutions and Consumer Credit will hold a markup of H.R. 627, the Credit CardholdersÂ’ Bill of Rights Act. This bill, sponsored by Rep. Carolyn Maloney (D-NY), would put an end to many of the same abusive lending practices as the Credit CARD Act.

In September 2008, the Credit CardholdersÂ’ Bill of Rights Act was passed overwhelmingly by the House of Representatives with bipartisan support--a vote of 312 to 112, with 84 Republicans joining Democrats to support the bill. Unfortunately, the Senate did not have time to take up the bill before the end of the legislative session. Although the Federal Reserve and other bank regulators issued a rule in December 2008 that would prohibit many of the same unfair practices, the rule does not take effect until July 2010, giving credit card companies 18 months to proceed unchecked and delaying relief for millions of American consumers. The legislation approved today by the Banking Committee, and the provisions of the bill sponsored by Rep. Maloney, would provide much more immediate and wider-reaching relief.

"Now that our regulating agencies have acknowledged that credit card issuers need to be brought back into line, it is up to Congress to stand up for beleaguered consumers. We look forward to working with members of the Senate to quickly pass the Credit CARD Act and speed relief to millions of Americans struggling to stay afloat in the midst of recession."

Visit demos.org to find extensive research, congressional testimony on credit card debt and credit industry practices. To schedule an interview with Tamara Draut, see contact information.

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