Back on May 22, 2009, President Obama signed into law the Credit CARD Act of 2009, a major reform credit card reform bill designed to protect consumers from the worst abusive credit practices of the banks and credit card companies. The bill had passed in the House with overwhelming bipartisan support. Peter Roskam voted against the bill, siding with the predatory lenders over consumers in his district. I wrote about that vote here.
Some of the protections afforded to consumers in this law were not set to become effective until as late as August 2010 to allow lenders time to prepare for the changes. But rather than make good faith efforts to begin to bring their practices into compliance with the new law, credit card companies went engaged in an orgy of rate hikes at the worst possible time for consumers already suffering because of the economic crisis and high unemployment rates. A study begun by the Pew Health Group beginning in July 2009, found that median advertised interest rates on bank credit cards had increased by 13 – 23 percent over rates measured in December 2008. The study also found that unfair or deceptive practices remained just as widespread as before Congress passed the new law and some practices had even become more common.
As it became clear that the lenders were not using the allotted time to make changes but rather to gouge consumers while they still could, the House Financial Services Committee drafted new legislation to accelerate reform. The new bill, H.R. 3639 - Expedited CARD Reform for Consumers Act of 2009 – calls for the immediate enactment of certain key provisions in the original legislation including:
- Prohibits arbitrary interest rate increases and universal default on existing balances;
- Prohibits issuers from charging over-limit fees unless the cardholder elects to allow the issuer to complete over-limit transactions, and also limits over-limit fees on electing cardholders;
- Requires payments in excess of the minimum to be applied first to the credit card balance with the highest rate of interest;
- Prohibits issuers from setting early morning deadlines for credit card payments;
- Prohibits interest charges on debt paid on time (double-cycle billing ban);
- Requires issuers extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended;
- Requires penalty fees to be reasonable and proportional to the omission or violation.
- Requires that creditors periodically review all interest rate increases since January 2009 and reduce rates when a review indicates that a reduction is warranted.
The bill was brought to the House floor for a vote on November 4th and voting was similar to that for the original bill: it passed 331-92 with 83 Republicans voting “Aye”.
Peter Roskam again voted to help the predatory lenders rather than to protect his constituents from their abusive practices. No surprise here. Roskam receives a huge proportion of his campaign contributions from the financial sector and routinely uses our vote in Congress to tend to that industry’s interests.
The bill now goes to the Senate where hopefully it will be voted on without delay and sent to the President.
