August 11, 2010
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The New Replaces The Old, Pt.1
Cooked up new fees to replace the old.In May 2009, President Barack Obama signed into law the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) which calls for the establishment of a Consumer Financial Protection Bureau. The Bureau will be responsible for carrying out and regulating the credit card rules to ensure that all lenders are following the law and to ensure that stiff penalties are handed out to any financial institution in violation. The head of that bureau will be appointed by the President and has yet to be announced. However, observation of recent activities of credit card companies that have imposed new fees to replace the old ones that have been banned by the CARD Act. If these activities are any indication as to what we can expect in the future, the bureau's head will have his/her work cut out for him/her.
While the CARD Act was aimed at eliminating the unfair and deceptive practices of the credit card industry by banning certain practices, it looks as though many of the nation's top lenders have already found loopholes in the law and have cooked up new fees to replace income lost as a result of certain provisions of the act. If that isn't bad enough, it has been said that some credit card companies are continuing to violate the law with little disregard for the CARD Act.
Experts say that with losses running nearly $400 million a year from the loss of interest and fees as a result of the CARD Act, credit card companies are getting desperate. Add to that, the record breaking number of card write-offs and it goes without saying that banks will push the law to its limit and then some to implement new ways to generate lost income. What is most concerning is that it may be six months or more before President Obama is able to have a bureau leader and even longer before the new committee will fully a float. To learn more about how these issues