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.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Jennifer Liberto, senior writer

WASHINGTON ( -- 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.

"I haven't heard any evidence that the competitive market isn't working," said Rep. Jeb Hensarling, R-Texas. "In the absence of that, why are you attacking risk-based pricing?" To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.