Levin Statement on Fed Vote on New Credit Card Rules: Good First Step, But Not Enough to Prevent Abusive Practices

WASHINGTON – Sen. Carl Levin, D-Mich., issued the following statement on the Federal Reserve Board’s vote today on new regulations for the credit card industry:

“The Fed’s new regulations reining in the credit card industry are a good first step, but they don’t prevent a number of unfair, deceptive, and predatory practices that saddle many American families with crushing debt.

“Every day the taxpayer is being asked to foot the bill for our biggest banks’ irresponsible lending practices. America’s banking giants can’t be allowed to dig themselves out of the hole they are in by loading up American families with unfair fees and interest charges. Even as the prime rate plummets, credit card companies are hiking interest rates on millions of customers who play by the rules.

“The new credit card regulations end some abuses,” Levin said, “in particular, by preventing banks from retroactively raising interest rates on cardholders who meet their obligations, forcing banks to mail credit card bills at least 21 days before the payment due date, and requiring banks to apply consumer payments in a fairer manner. But the regulations regrettably leave in place many blatantly unfair credit card practices that mire families in debt. Legislation is needed to stop abuses such as charging interest on debt that was paid on time, pay-to-pay fees, and universal default.”

As Chairman of the Permanent Subcommittee on Investigations, Levin has led an extensive investigation into unfair credit card practices. His efforts included holding hearings, offering legislative proposals, and commissioning a groundbreaking 2005 Government Accountability Office report. In July 2008, Levin joined Sen. Chris Dodd, D-Conn., in introducing comprehensive legislation to end abusive practices that unfairly deepen or prolong credit card debt. The Dodd-Levin bill, S. 3252, The Credit Card Accountability, Responsibility and Disclosure Act (C.A.R.D. Act), would prohibit banks from, for example, charging of interest on credit card debt that was paid on time, attaching interest charges to fees, forcing consumers to pay a fee to pay their bills, and hiking interest rates on consumers who pay their bills on time.

For more information on the Credit Card Accountability, Responsibility and Disclosure Act, S. 3252, see Levin’s Senate floor statement.