House and Senate Consider Enforcing Credit Card Reform Sooner

October 22, 2009  |   Posted in Credit Guy Blog, Industry News   |   0 Comments   Tags: barney frank, Ben Bernanke, carolyn maloney, credit card reform, finance reform, Mark Udall

The Democrats in Washington were busy patting each other on the back when they passed the credit card reform bill earlier this year. That quickly changed though when they realized that the reforms they passed were only inciting the credit card companies the raise interest rates, lower limits, and increase fees before the laws are enforced. Many of us in the industry had seen the reaction of the credit card companies coming like an overloaded freight train a mile away. The delay written into the credit card reforms were nothing more than Congressional leaders bowing to the pressure of the banking industry lobbyists. Now that they’ve realized what a colossal mistake they made by delaying the implementation of these new rules and regulations… well let’s just say they’re not as self congratulatory.

Reps. Carolyn Maloney (D-NY) and Barney Frank (D-MA), in the House, and Sen. Mark Udall (D-CO) in the Senate, are introducing legislation today on the Hill to minimize the damage the delay in the legislation caused. The back peddling they’re doing today would put the new rules and regulations into effect by December 1st, 2009. That’s 3 months sooner than required in the current law. It’s amazing that they didn’t realize this would happen when they wrote the legislation. If Congress passed legislation to outlaw soda, but said the law would not go into effect for another year, would Congress be surprised when the price of soda went up? The fact is, they knew what would happen, but the lobbyists hired by the banking industry made more of an impact on members of Congress than their constituents.

Democrats have been urging Ben Bernanke, the Federal Reserve Chairman, to put the reforms in place sooner, but he has been reticent to do so. He explains his apprehension by stating that an earlier start date for the legislation “could provide benefits for consumers, [but] the Fed continues to believe that, given the breadth of the changes required by the law, card issuers must be afforded sufficient time for implementation to allow for an orderly transition.” Suffice it to say many on Capitol Hill were not impressed by Bernanke’s response. Credit card companies, however, were. Let’s hope they don’t celebrate by raising interest rates even more.