November 26, 2009
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Senator Levin Addresses Feds, Pt.1
Record breaking complaints.Senator Levin's letter continued to recap the. U.S. Senate Permanent Subcommittee on Investigations investigation which began in 2005 and looked into the unfair credit card industry's practices. The investigation was sparked by the Government Accountability Office (GAO) request to examine credit card fees, interest rates, and disclosure practices of 28 highly circulated credit cards from the nation's top six card issuers. A year later, the subcommittee released its report indicating that interest rates and fees had "proliferated" and card disclosures had "deteriorated." At that time, the subcommittee conducted a series of interviews with consumers, card issuers, card payment networks, federal regulators, credit bureaus, debt collectors, legal advocates, and public interest groups.
The investigation continued through 2007 as the subcommittee conducted hearings with testimonies from credit card consumers and the chief executives of the major card companies including Bank of America, JPMorgan Chase, Citi Cards, Capital One, and Discover Financial Services. The hearings surrounded abusive practices involving excessive and duplicate fees, interest charges on debt paid on-time, excessively high interest rates, application of higher interest rates retroactively to existing card debt, unfair allocation of credit card payments, and unfair interest rate hikes.
The Subcommittee also received more complaints than on any other issue during the past ten years of alleged unfair treatment by credit card companies. They received thousands of complaints from across every age group, all income levels, and across the nation. In looking at the complaints, there was little room for doubt that the financial industry had indeed been abusing American. In 2007, a recommendation was made to the Board of Governors of the Federal Reserve System advising that the current proposed rules were inadequate. It was also recommend to the Board that they adopt consumer protection provisions outlined in the Stop Unfair Practices in Credit Cards Act. Senator Levin introduced the bill which was referred to the Committee on Banking, Housing, and Urban Affairs on May 15, 2007, and never made it past the committee.