July 15, 2009
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News: Strong Case For Consumer Finance Agency
If you haven't received any small print documents relating to changes in your credit card contracts, it is likely you'll soon find one lurking in your mail box. Credit card companies are in a scurry to change interest rate terms and raise fees such as balance transfer fees before the new predatory lending bill becomes effective in February 2010. Of course, a big question is: Why did lawmakers choose to wait nine months before making the law effective? Nine months of unregulated freedom giving banks every opportunity to stick it to the credit card consumer. President Obama's newest proposal that would establish the Consumer Finance Protection Agency would give the agency the power to stop lenders from trampling over vulnerable Americans.
There has been a great deal of controversy surrounding the new proposed agency. Congressman Barney Frank (D-MA), Chairman of the House Financial Services, is a staunch supporter of the new agency. Frank says his office along with many of his colleagues have been inundated with complaints that credit card companies continue to prey on the already down trodden consumer. In some cases, lenders are hiking monthly minimum payments on existing balances by changing the pre-existing terms. If the new law had already been in effect, these bloodthirsty credit card companies would be in clear violation and subject to strict penalties. Lawmakers have, however, given them a nine month free ride.
At a hearing on Wednesday, Congressman Frank told attendants that these actions only serve to strengthen the case for the new agency. He also stated that the agency would have the power to inhibit the credit card companies' predacious activities without having to go to Congress to pass a law. Furthermore, Frank said he had no objection to raising the minimum payments due on future purchases; however, changing terms on existing balances is clearly unjust.