Fed proposes sweeping change to credit card rules

[babylonsister]

Fed proposes sweeping change to credit card rules
By Rob Hotakainen | McClatchy Newspapers

* Posted on Friday, May 2, 2008



WASHINGTON — The Federal Reserve Board moved Friday to place new regulations on the nation's credit card industry that would make it more difficult for lenders to raise interest rates and give consumers more time to pay their bills.

If enacted, the regulations would be the most sweeping change in decades, offering consumers more protection against late fees and stopping lenders from making credit offers that regulators deem to be deceptive.

"The proposed rules are intended to establish a new baseline for fairness in how credit card plans operate," said Federal Reserve Chairman Ben Bernanke. "Consumers relying on credit cards should be better able to predict how their decisions and actions will affect their costs."

The banking industry promised a fight, saying the regulations would hurt consumers.

"The Federal Reserve's proposal is an unprecedented regulatory intrusion into marketplace pricing and product offerings," said Edward Yingling, president and chief executive of the American Banking Association. "We are deeply concerned that these rules will result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards. In short, everyday consumers will bear the real cost of these proposals."

more...

http://www.mcclatchydc.com/251/story/35687.html

[WCGreen]

1. So we can bail them out when they are facing impending doom, give them

essentially free bridge loans, re-write the bankruptcy laws to make it harder to write off debt and they now get upset about the Fed's intruding into the free market...

I paid down my credit card and just keep it for emergencies...

Fuck 'em all...

[DJ13]

2. Well thats great, but wheres a cap on the interest rates they can charge?

Without that this is farting in the wind.

[jaxx]

3. They need to do something.

The idea that paying your power bill a few days late can result in higher interest rates on credit cards is ridiculous. I know people who's car insurance rates have gone up for late credit card payments. This whole thing of rates being tied together has hurt the consumer, and given the businesses more money due to higher interest. No wonder the bankers don't want it changed.

Next the congress needs to go in and kill the bankruptcy reform the pubs put into effect.

[Divernan]

4. Obama's platform specifically addresses predatory credit card practises & bankruptcy reform

Address Predatory Credit Card Practices
Obama will establish a five-star rating system so that every consumer knows the risk involved in every credit card. He also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.

Create a Credit Card Rating System to Improve Disclosure: Obama will create a credit card rating system, modeled on five-star systems used for other consumer products, to provide consumers an easily identifiable ranking of credit cards, based on the card's features. Credit card companies will be required to display the rating on all application and contract materials, enabling consumers to quickly understand all of the major provisions of a credit card without having to rely exclusively on fine print in lengthy documents.
Establish a Credit Card Bill of Rights to Protect Consumers: Obama will create a Credit Card Bill of Rights to protect consumers. The Obama plan will:
Ban Unilateral Changes
Apply Interest Rate Increases Only to Future Debt
Prohibit Interest on Fees
Prohibit "Universal Defaults"
Require Prompt and Fair Crediting of Cardholder Payments
Reform Bankruptcy Laws
Obama will reform our bankruptcy laws to protect working people, ban executive bonuses for bankrupt companies, and require disclosure of all pension investments.

Cap Outlandish Interest Rates on Payday Loans and Improve Disclosure: Obama supports extending a 36 percent interest cap to all Americans. Obama will require lenders to provide clear and simplified information about loan fees, payments and penalties, which is why he'll require lenders to provide this information during the application process.
Encourage Responsible Lending Institutions to Make Small Consumer Loans: Obama will encourage banks, credit unions and Community Development Financial Institutions to provide affordable short-term and small-dollar loans and to drive unscrupulous lenders out of business.
Reform Bankruptcy Laws to Protect Families Facing a Medical Crisis: Obama will create an exemption in bankruptcy law for individuals who can prove they filed for bankruptcy because of medical expenses. This exemption will create a process that forgives the debt and lets the individuals get back on their feet.