November 25, 2009
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News: Senator Levin Addresses Federal Reserve
Senator Carl Levin (D-MI) Chairman of the U.S. Senate Permanent Subcommittee on Investigations sent a letter to the Federal Reserve with comments covering the proposed rule to amend credit card rules. The letter supported the Board of Governors of the Federal Reserve System's proposed rule to implement the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) scheduled to be enacted on February 22, 2010. Senator Levin commented on the credit card industry's attempts to subject consumers to abusive practices which now "requires further clarification and strengthening" of the consumer safeguards established by the CARD Act to ensure effective implementation. The Senator's letter outlined the investigation process and stated recommendations in clarifying the rules.
The industry's intent to provide Americans with convenient short-term loans a number of years ago has now grown to include steep and damaging costs. In recent years, credit card customers have been subjected to a variety of unfair and deceptive practices including interest rates soaring to nearly 30 percent, interest accessed on paid debt on time, arbitrary interest rate increases, excessive fees, and unfair application of payments. With high unemployment rates, a decreased housing market, a weak economy, abusive credit card industry practices, and high interest rates, many Americans are greatly burdened. For most, they are “facing the worst economic hardship of their lifetime.” Furthermore, taxpayers have flipped the bill for banks "irresponsible lending practices.”"
In 1968, lawmakers enacted the Truth in Lending Act (TILA) which was designed to provide consumers with meaningful disclosure of credit terms to enable them to compare their various credit term options and avoid uninformed use of credit. Furthermore, the act was aimed at protecting the consumer against wrongful credit billing standards and card practices. Results of the investigation revealed that existing regulations "were not sufficient to protect the consumer against unfair credit card practices." Read the series on Levin's address to learn more.