Financial Crisis News Center

Frank Statement on Banks' Response to Credit CARD Act

This story appeared in Bank Digest.

In a statement regarding implementation of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, House Financial Services Committee Chairman Barney Frank, D-Mass., commented on letters that credit card companies have been sending to their customers. “These letters indicate that Americans are now seeing the benefits of the CARD Act. It was unfortunately the case that some banks tried to game the system after we passed the bill into law, but their actions provide further evidence of our need for a Consumer Financial Protection Agency...Had the CFPA been in existence we could have moved right away to block the banks' egregious actions.”

Dodd Highlights Credit CARD Act Changes

This story appeared in Bank Digest.

Senate Banking Committee Chairman Chris Dodd, D-Conn., has reminded consumers to look for important new credit card protections on Monday, Feb. 22, 2010, when major provisions of the Credit CARD Act take effect. In his statement, Dodd noted, “I urge consumers to learn more about these significant new protections, and keep a close eye on their credit card statements.” He added, “Make sure credit card companies are giving you 45 days notice if they’re going to change your terms. If you don’t like the new terms, shop around for a better deal and exercise your new right to opt-out of the changes.”

Geithner Remarks on Credit CARD Act Implementation

This story appeared in Bank Digest.

Treasury Secretary Tim Geithner has issued a statement on the implementation of the new rules under the Credit Card Accountability, Responsibility, and Disclosure Act signed into law by President Obama last spring. “With today’s implementation of new rules, we are taking a critical step forward in our effort to protect American families by prohibiting the use of unfair retroactive rate hikes and late fee and over-limit fee traps by credit card companies.” Geithner added, “We continue to work on strengthening consumer protections and disclosure for a wide array of financial products. As we work with Congress on broader reform to make our financial system safer and more stable, we are also working to consolidate the fragmented authority of seven separate agencies into a single, independent and accountable Consumer Financial Protection Agency.”

Fed Adopts Final Credit Card Rules

This story appeared in Bank Digest.

The Federal Reserve Board has adopted amendments to Reg. Z—Truth in Lending (12 CFR 226) that are intended to protect consumers from what are felt to be abusive practices by credit card issuers. The rules implement provisions of the Credit CARD Act by finalizing an interim rule that took effect Aug. 20, 2009, and they also implement Credit CARD Act provisions that take effect Feb. 22, 2010. In addition to adopting these final rules, the Fed has withdrawn proposed amendments to Reg. Z and to Reg. AA —Unfair or Deceptive Acts or Practices (12 CFR 227) as they are no longer necessary. The amendments are effective Feb. 22, 2010, although compliance with some provisions is not mandatory until July 1, 2010.

Further Guidance Provided on Credit CARD Act

This story appeared in Bank Digest.

The Federal Deposit Insurance Corp. has updated the information it provided in FIL-44-2009 regarding statutory amendments to the Truth in Lending Act made by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act). In its latest guidance, the FDIC has provided information regarding amendments made by the Credit CARD Technical Corrections Act of 2009, which narrowed the scope of application of the Credit CARD Act’s requirement that creditors mail or deliver periodic statements at least 21 days before the payment due date to credit card accounts only.

OTS Guides on TILA Changes

This story appeared in Bank Digest.

The OTS has provided guidance on changes to the Truth in Lending Act (TILA) made by the Credit Card Accountability Responsibility and Disclosure (Credit CARD) Act of 2009 and the Credit CARD Technical Corrections Act of 2009. According to the agency, TILA now states that a creditor may not treat a payment on a credit card account under an open-end consumer credit plan as late for any purpose, unless the creditor has adopted reasonable procedures designed to ensure that each periodic statement is mailed or delivered to the consumer at least 21 days before the payment due date. This correction was effective Nov. 6, 2009.

GAO Reports on Effects of Interchange Fees

This story appeared in Bank Digest.

Merchant costs for accepting credit cards have increased as consumers have used cards more often, according to a GAO Merchant costs for accepting credit cards have increased as consumers have used cards more often, according to a GAO report required by the 2009 Credit Card Accountability, Responsibility, and Disclosure Act. The agency attributed some of that increase to how Visa and MasterCard have competed for card issuers by increasing the number of interchange fee categories and the level of these fees. For some issuers, such as community banks, these fees generate significant revenue, and they also have been among large banks' most profitable activities. The report considers four options for reducing such fees but notes that implementation problems exist for each.

House Passes Expedited Credit Card Reform Bill

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

The House of Representatives voted 331 to 92 on November 4 in favor of H.R. 3639, the Expedited CARD Reform for Consumers Act of 2009, which would speed up the effective date of credit card reform legislation from Feb. 22, 2010, to immediately upon signing of the bill.

The bill was introduced in reaction to reports that credit card companies were abusing the grace period by altering rates and terms after President Obama signed reform legislation in May. A recent report from The Pew Charitable Trusts found that advertised credit card interest rates rose an average of 20 percent in the first two quarters of 2009, even as banks’ cost of lending declined.

House Passes Expedited Credit Card Reform Bill

This story appeared in Bank Digest.

The House of Representatives voted 331 to 92 on Nov. 4, 2009, in favor of H.R. 3639, the Expedited CARD Reform for Consumers Act of 2009, which would speed up the effective date of credit card reform legislation from Feb. 22, 2010, to immediately upon signing of the bill. The bill was introduced in reaction to reports that credit card companies were abusing the grace period by altering rates and terms after President Obama signed reform legislation in May. A recent report from The Pew Charitable Trusts found that advertised credit card interest rates rose an average of 20 percent in the first two quarters of 2009, even as banks’ cost of lending declined. H.R. 3639 includes a provision that allows any card issuer to be exempt from the earlier effective date if they adopt a moratorium on interest rate increases on current balances and new balances incurred between the date of enactment and Feb. 22, 2010. The bill would also exempt small credit card issuers that frequently outsource computer programming functions, and gift card providers.

http://www.house.gov/apps/list/press/financialsvcs_dem/presscredit_110409.shtml

Dodd Introduces Bill to Immediately Freeze Credit Card Interest Rates

This story appeared in Bank Digest.

Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., introduced a bill to immediately freeze credit card interest rates, fees and finance charges on existing balances. The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, enacted in May, prevents arbitrary interest rate, fee and finance charge increases on a customer’s existing balance. It requires 45 day notification of interest rate increases, and increases from 14 days to 21 days the amount of time before a bill is due that a statement must be delivered. According to a Banking Committee press release, “Unfortunately, credit card companies have been jacking up rates in a last ditch effort to squeeze customers before all of the bill’s provisions can take effect.” Dodd’s bill would force companies to immediately freeze rates, finance charges and fees on existing balances until the remaining provisions in the Credit CARD Act go into effect. “We worked long and hard to enact the safeguards included in the Credit CARD Act,” said Dodd. “But as soon as it was signed into law, credit card companies were looking for ways to get around the protections this Congress and the American people demanded. This bill would end those abuses and further protect customers today.”

http://banking.senate.gov/public/index.cfm?FuseAction=Newsroom.PressReleases&ContentRecord_id=9229fdac-acc8-f78e-3f79-2aed0eb2e24c&Region_id=&Issue_id