Credit card crackdown advances
House panel OKs bill limiting increases on credit card interest rates and fees. Changes likely before full vote as White House takes more active role.
WASHINGTON (CNNMoney.com) -- A key House panel on Wednesday advanced a bill to crack down on credit card interest rates and fees amid signs the Obama administration will try to toughen the bill further before it goes to a full vote.
The House Financial Services Committee passed the bill 48-19; nine Republicans joined the panel's Democrats in voting for it. The bill could go to the full House for a vote as soon as next week.
The committee vote came as President Obama gets set to meet Thursday with 14 executives from the largest credit card companies.
Until last Sunday, when Obama economic adviser Larry Summers spoke publicly about the administration getting tough on credit card companies, the White House had been largely silent about the bill.
Obama advocated for a credit card holder bill of rights during last year's presidential campaign.
The White House intends to reveal its proposed changes Thursday after the meeting with executives.
One change the administration may seek would be a provision requiring better notification on the long-term consequences of making only the minimum suggested payment, according to Rep. Barney Frank, D-Mass., chairman of House Financial Services.
The legislation is a cornerstone of efforts by consumer groups and mostly congressional Democrats to rewrite rules governing lending practices by card companies, banks and others The House bill, championed by Rep. Carolyn Maloney, D-N.Y., is similar to one passed by the House last year.
"This bill cracks down on some of the most outrageous abuses," Maloney said Wednesday. "My bill levels the playing field so consumers have more control over their credit."
In the Senate, which did not advance credit card proposals last year, a committee has passed a version of the House bill, with one Democrat voting against it.
The House bill mirrors tougher rules that the Federal Reserve passed last December but that don't go into effect until July 2010.
The Fed changes would stop higher interest rates from being imposed when consumers are late paying unrelated bills. The changes also stop companies from averaging finance charges from two previous cycles, a practice that dings consumers who carry a balance and pay it off.
Several House Republicans said the pending Fed rule changes make congressional action unnecessary.
But Frank, chairman of the House Financial Services panel, disagreed.
"What the Federal Reserve giveth, the Federal Reserve can taketh away," he said. Frank pointed out that the Fed could later undo the rules if Congress doesn't pass a law.
Meanwhile, industry lobbyists are fighting both the House and Senate bills for many reasons. But they especially don't like how the proposals would prevent card issuers from raising interest rates and fees based on risky behavior.