October 22, 2009
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News: House Committee Approves Change In Date
Watch out credit card companies...here it comes! The House Financial Services Committee chaired by Representative Barney Frank (D-MA) voted to move the enactment date for the credit card reform legislation up to December 1, 2009 from the previous date in February 2010. The Credit Card Accountability Responsibility and Disclosure Act of 2009 which was signed into law by President Barack Obama on May 22, 2009 gave lenders over nine months to prepare for the new regulations. However, the majority of the lenders used that time to get a jump on the law by carelessly imposing stiff penalties, raising interest rates to loan sharking levels, and slamming doors on accounts in good standing.
While some Republicans voiced their disapproval of the move, it wasn't enough to douse out the smoke from Representative Carolyn Maloney (D-N.Y.) and Chairman Barney Frank. Ms. Maloney stated that the credit card industry has only itself to blame by using the extra time to participate in "unfair practices." Ben Bernanke, Chairman of the Federal Reserve had also voiced his opposition to moving the enactment date up in a letter to Representative Spencer Bachus (R-AL). Bernanke voiced his concern that such action would have a devastating effect on small credit card companies. However, the new enactment date would only apply to card issuers of with than two million active accounts. It would also exclude gift card issuers.
In an attempt to delay the vote, Republicans submitted a proposal that would give the Federal Reserve a week to verify that the credit card industry would be able to meet the December 1st deadline. The committee rejected the proposal. Now that the House Financial Services Committee has approved the legislation, it must go before the House and Senate for a vote before the final enactment. An earlier enactment date would give some relief to Americans who have been beaten down over the past few years by the unfair and deceptive practices of the financial industry, rising unemployment, and devastating losses in the housing industry.