Report: Consumer groups blast Fed
Advocates say report on credit card practices turns blind eye to problems that debt poses to many customers.

NEW YORK (CNNMoney.com) -- Consumer groups are criticizing a Federal Reserve report that found credit card issuers are not offering credit to consumers "indiscriminately," according to a published report.

The Fed's report to Congress found that "as a matter of industry practice ... card issuers do not solicit customers or extend credit to them indiscriminately" without assessing their ability to repay, according to USA Today.

credit_card_swipe.03.jpg

But consumer groups told the paper the Fed is being too soft on the practices of credit card issuers, arguing that low- and middle-income families are being hurt by high fees, charges and credit card interest rates.

Travis Plunkett, legislative director for the Consumer Federation of America, said Fed data shows that 27 percent of the lowest-income U.S. households that carry consumer debt paid more than 40 percent of their income toward this debt in 2004.

"There is still a problem. These people are at serious risk of bankruptcy default," he told the paper.

Linda Sherry, director of national priorities for Consumer Action, told the paper the Fed "bends over backwards" to protect the banking industry, ignoring practices such as higher credit limits and mass offers of credit.

"I don't think you need a study to know they're doing this," she said.

The Fed did not have any additional comment on the report. Nessa Feddis, senior counsel for the American Bankers Association, told the paper the report shows that the industry is doing "a good job of ensuring that consumers are able to handle credit cards.

"The fact that 95 percent of accounts are paid on time (each month) shows that the system works," Feddis added.

Related: Plastic under attack. Top of page

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.