“Thank you, Mr. Chairman for bringing this bill to mark-up and for your support.  

“This is a landmark event.  It is the first time Congress has ever considered credit card reform and it is high time.  Americans are falling further and further into credit card debt – almost a trillion dollars and rising exponentially.  Instead of using their stimulus checks to boost our economy, many Americans had to use them to pay off just a little of their credit card debt.

“I believe in personal responsibility, but unfair and deceptive credit card practices have made it literally impossible for consumers to borrow only what they can repay.  I am a strong advocate for the free market, but these practices prevent fair competition. 

“After I introduced this bill, the Federal Reserve, OTS, and NCUA proposed rules to eliminate the same credit card practices that my bill addresses.  The rules strengthen the case for this bill - they declare that the practices the bill seeks to eliminate are unfair and deceptive.  That means the Fed has determined these practices cause a market failure and that competition and the free market cannot function unless they are eliminated.

“As Chairman Bernanke said about credit cards to this Committee, ‘the market will actually work better and produce more credit in situations where there is not so much distrust and confusion about what it is exactly that is in the contract.’

“I’ve heard that some members are considering a substitute that would replace this bill with a sense of Congress supporting the proposed Fed rule.     

“But many issuers oppose the rule on the grounds that enacting these reforms as a rule rather than a law could create serious retroactive liability problems for the financial industry, creating uncertainty in the markets.  This bill does not raise that issue.

“More importantly, as the Chairman said, Congress is in the Constitution and the Fed is not.  This Congress and this majority should not wait for the Administration to act, but should lead.  We should not abdicate our responsibility to others.

“The provisions of the Committee Print represent the evolution of this bill over the past year and a half.  We met with stakeholders: issuers, consumer groups, and the regulators.  We held six hearings in my Subcommittee. 

“A year ago I held a roundtable, which produced Gold Standard Principles to guide voluntary issuer action.  Several issuers announced changes in policy consistent with the Principles and I applauded these steps.  

“But without legislation, lucrative abusive practices will continue and issuers who give them up will lose profits.  We need legislation to level the playing field for consumers and issuers so that the normal forces of the free market can work again.  This bill targets specific abusive practices:

* Retroactive rate increases that trap cardholders with unexpected debt;

* Double cycle billing that charges interest on balances already paid; 

* Payment allocation that prevents cardholders from paying down high rate balances;

* Due date gimmicks that trick people into paying late and getting hit with retroactive rate increases,    penalty interest rates, late fees, and a finance charge;

* Multiple overlimit fees for one overlimit charge; and

* Subprime cards whose annual fees alone eat up most of the credit line before a single charge is made. 

“We have added a provision from the bill by Mr. Cleaver and Mr. Udall barring credit cards to minors.

“I urge my colleagues to let their constituents know where they stand on credit card reform and vote to send this long-overdue legislation to the floor.”

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