08-17-2009, 11:54 PM
http://www.economicpopulist.org/content/how-bank-lobby-beat-credit-card-reform
President Obama Decides to Provide Fiscal Relief for the American People
Really, Mr. President, You Shouldn't Have!
In February 2009, while Obama's economic team was busy shoving fistfuls of money into the coffers of the banking cartel, Obama turned his attention to long-overdue regulatory legislation to protect American consumers. He proposed reform of deceptive and exploitive credit card practices that had damaged so many American consumers. "Itââ¬â¢s only fair," opined the New York Times. "The federal government is doing everything it can to restore the nationââ¬â¢s banks to health. In return, Congress should require those banks to give their credit card customers a better break."
The Credit Card Accountability Responsibility and Disclosure Act of 2009 was introduced and co-sponsored by our hopelessly compromised Congress folk, and the proposed rules were announced. A few months later it emerged from the sausage factory. In a rare bipartisan moment, the Senate passed the Bill with 90 yes votes and only 5 no votes. The House followed up the next day, passing the Bill by a vote of 361 to 64. President Obama signed the Bill into law on May 22, 2009.
Okay, what wrong with that picture? Anyone?
Where the hell did this "rare bipartisan moment" come from?
If the Republicans voted for it, you can be certain of one thing. It was written to screw consumers and pump even more profits into the banks. Indeed, Bankers and their Republican "fluffers" were more than satisfied with the final Bill. The Banking Lobby had successfully derailed the legislation by buffaloing the young staffers who were working on it. As for the Democrats, they signed the final Bill, either knowingly or cluelessly.
The Credit Card Reform Bill is one of the most ill-timed and damaging pieces of legislation to come out of Washington in recent years. The screwing the Democrats got from the Banking Lobbyists will certainly become the stuff of Legend. To add insult to injury, the Republicans debased it with an amendment that would allow concealed weapons to be carried in the National Park and Wildlife Refuge Systems.
What? This is the First You've Heard of It?
By far, the most destructive aspect of the Bill Is that it will not take affect for another year. Of course, the original Bill did include a provision that required card issuers to implement all reforms within 90 days of the bill becoming law. Not only that, it banned card issuers from raising rates on existing balances until then.
But, the Lobbyists nixed all that. Now, the new rules will not kick in until July 2010, giving the banks more than a year to wreak havoc on consumers. We've seen plenty of that in just the past few months. Banks have been hiking rates, raising fees, cutting credit limits, closing accounts, and doubling minimum payments. The banks admit they're soaking consumers and forcing repayments before the new rules kick in. As a result, the banks' second quarter earnings went through the roof last week.
Congress agreed to delay enforcement of the law because the Lobbyists whined that the banks couldn't possibly change their contract and get them printed that fast. Meanwhile, they found the time to change the way they do business with millions of customers, including me. I've received stacks of new contracts, revised terms, and difficult demands in the past few months. Haven't you? Meanwhile....
Puts Congress on a Short Leash
Anyone who has used credit cards over the years knows there are only two things that really matter:
1. You don't want your interest to get jacked up for no reason.
2. You do want a cap on the interest rate the bank can charge you.
Bad news. Congress caved and you're not getting either of these.
The banking lobby successfully defeated the toughest provisions and neutered the rest with vague and unspecified language. Some practices they merely finessed. Take "universal default," for example. This was one of the so-called victories of Credit Card Reform. In fact, that practice was abandoned by most banks some time ago. It has been successfully replaced by smart software that raises rates and lowers credit limits based on where consumers shop. (I can see the lobbyists smirk as they reluctantly "gave in" on universal default for the bonus year they got.)
What Congress Proposed: Bernie Sanders proposed a provision that would cap credit card interest rates at 15 percent. He noted that one-third of credit card holders pay interest rates between 20 and 40 percent. Unfortunately, the anti-loan-shark clause was eliminated immediately.
What you Get Instead: The law does not put a cap on the interest rate that can be charged. Issuers will still have the ability to raise rates at any time for any reason. The bill only restricts increases in APR on your "existing" balance. The bank is merely required to give you six weeks notice of increases affecting "future" balances. (Big deal. They already do that. That's what the small print junk mail they send out is all about.)
Bonus Loophole: The Bill forgot to mention variable rate interest. Oops. Variable-rate cards will not be covered by the new law, so banks can change your interest rate whenever they want. By the time the law goes into effect, most credit cards will have variable rate interest, which will change monthly. No notice required.
In fact, Bank of America has already notified customers that they will no longer have fixed-rate cards. JPMorgan Chase, the largest volume issuer, will switch all their cards to variable rates in August. Most banks will follow suit -- since this would allow them to ignore the most important rules in Credit Card Reform.
Vague Language: That's one thing the Credit Card Reform Bill has lots of. The wording of the new law leaves room for a loose interpretation of some rules. For example, the law requires penalty fees to be "reasonable and proportional to the omission or violation." It's up to the bank to decide what "reasonable" means.
The law also requires promotional rates to last at least six months. But, six months from what date? The date of the first charge? The date of the first payment? The date the offer was made? The banks will decide.
The "Deadbeat" Solution
For those of you who pay off your balance in full every month (we know how proud you are of that stunning achievement) your free ride is over. The banks know who you are. They even have a name for you: "Deadbeats." (The rest of us are known as "Revolvers.") Interest will begin to accrue from the day you use the card, rather than from the statement date. No more "grace -period" for you. You'll owe interest every time a bill arrives.
Furthermore, get ready for a hefty annual fee for the convenience of using your card the way you do. Banks say you can expect to pay at least $50 to $100 a year (or more if you're ever a day late or a dollar short). Oh, and those Points and Perks you're getting? They're getting drastically scaled back and will expire quickly. Make one mistake and you'll be stripped of them entirely.
Yep, Credit Card Reform is going to punish you too, even though you "did everything right."
President Obama Decides to Provide Fiscal Relief for the American People
Really, Mr. President, You Shouldn't Have!
In February 2009, while Obama's economic team was busy shoving fistfuls of money into the coffers of the banking cartel, Obama turned his attention to long-overdue regulatory legislation to protect American consumers. He proposed reform of deceptive and exploitive credit card practices that had damaged so many American consumers. "Itââ¬â¢s only fair," opined the New York Times. "The federal government is doing everything it can to restore the nationââ¬â¢s banks to health. In return, Congress should require those banks to give their credit card customers a better break."
The Credit Card Accountability Responsibility and Disclosure Act of 2009 was introduced and co-sponsored by our hopelessly compromised Congress folk, and the proposed rules were announced. A few months later it emerged from the sausage factory. In a rare bipartisan moment, the Senate passed the Bill with 90 yes votes and only 5 no votes. The House followed up the next day, passing the Bill by a vote of 361 to 64. President Obama signed the Bill into law on May 22, 2009.
Okay, what wrong with that picture? Anyone?
Where the hell did this "rare bipartisan moment" come from?
If the Republicans voted for it, you can be certain of one thing. It was written to screw consumers and pump even more profits into the banks. Indeed, Bankers and their Republican "fluffers" were more than satisfied with the final Bill. The Banking Lobby had successfully derailed the legislation by buffaloing the young staffers who were working on it. As for the Democrats, they signed the final Bill, either knowingly or cluelessly.
The Credit Card Reform Bill is one of the most ill-timed and damaging pieces of legislation to come out of Washington in recent years. The screwing the Democrats got from the Banking Lobbyists will certainly become the stuff of Legend. To add insult to injury, the Republicans debased it with an amendment that would allow concealed weapons to be carried in the National Park and Wildlife Refuge Systems.
What? This is the First You've Heard of It?
By far, the most destructive aspect of the Bill Is that it will not take affect for another year. Of course, the original Bill did include a provision that required card issuers to implement all reforms within 90 days of the bill becoming law. Not only that, it banned card issuers from raising rates on existing balances until then.
But, the Lobbyists nixed all that. Now, the new rules will not kick in until July 2010, giving the banks more than a year to wreak havoc on consumers. We've seen plenty of that in just the past few months. Banks have been hiking rates, raising fees, cutting credit limits, closing accounts, and doubling minimum payments. The banks admit they're soaking consumers and forcing repayments before the new rules kick in. As a result, the banks' second quarter earnings went through the roof last week.
Congress agreed to delay enforcement of the law because the Lobbyists whined that the banks couldn't possibly change their contract and get them printed that fast. Meanwhile, they found the time to change the way they do business with millions of customers, including me. I've received stacks of new contracts, revised terms, and difficult demands in the past few months. Haven't you? Meanwhile....
Quote:Congress Fumes Over Credit Card Rate Hikes as Lawmakers Feel the Heat over Lender's ActionsThe Banking Lobby
July 2009 Consumer Affairs -- As consumers have been hit with huge interest rate hikes and increases in their minimum monthly payments, complaints about Americaââ¬â¢s credit card industry are reverberating through the halls of Congress.
::
CitiGroup, Bank of America and Capital One have all, in recent days, began raising customersââ¬â¢ interest rates, in many cases saying it has nothing to do with the new laws and regulations that tie their hands early next year.
::
Chase has singled out its customers with the lowest interest rates, raising the minimum monthly payment from two percent of the balance to five percent. In many cases this action turns the credit card payment into the size of a home mortgage.
"This is what many of us feared about a law that didn't take effect right away," Sen. Chuck Schumer (D-NY) told The Washington Post.. "It was never going to take this long for the credit card companies to get ready for the new reforms. Instead, issuers are using the delay in the effective date to wring more dollars out of their customers. It is against the spirit of the law, and it is just plain wrong."
::
Rep. Carolyn Maloney (D-NY) authored the Credit Card Holder Bill of Rights legislation signed into law in May. She has been besieged with complaints from angry consumers.
"Rate hikes on existing balances being reported by news media and consumers, even when consumers pay on time and follow the rules, are unfair and deceptive and must be stopped," she said. "Capricious actions like these are why Congress overwhelmingly passed, and President Obama signed, my credit card reform bill: to level the playing field on behalf of consumers."
Maloneyââ¬â¢s protests not withstanding, Congress is pretty much powerless to stop credit card companies from raising rates and adjusting minimum payments, because they are allowed to do so under current laws and regulations. The changes do not take effect until February 2010.
::
In the Senate, Banking Committee Chairman Christopher Dodd said banks that harm consumers with their policies do so at their own peril.
ââ¬ÅIt is unbelievable that some of the same irresponsible actors that helped create the current financial mess would argue that we are doing too much for consumers,ââ¬Â he said. ââ¬ÅDonââ¬â¢t they realize that they need a healthy customer base if they want to continue to be successful?ââ¬Â
::
But the American Bankers Association essentially says ââ¬ÅI told you so,ââ¬Â noting the passage of the Credit Card Holders Bill of Rights in May is bringing about these changes.
Puts Congress on a Short Leash
Anyone who has used credit cards over the years knows there are only two things that really matter:
1. You don't want your interest to get jacked up for no reason.
2. You do want a cap on the interest rate the bank can charge you.
Bad news. Congress caved and you're not getting either of these.
The banking lobby successfully defeated the toughest provisions and neutered the rest with vague and unspecified language. Some practices they merely finessed. Take "universal default," for example. This was one of the so-called victories of Credit Card Reform. In fact, that practice was abandoned by most banks some time ago. It has been successfully replaced by smart software that raises rates and lowers credit limits based on where consumers shop. (I can see the lobbyists smirk as they reluctantly "gave in" on universal default for the bonus year they got.)
What Congress Proposed: Bernie Sanders proposed a provision that would cap credit card interest rates at 15 percent. He noted that one-third of credit card holders pay interest rates between 20 and 40 percent. Unfortunately, the anti-loan-shark clause was eliminated immediately.
What you Get Instead: The law does not put a cap on the interest rate that can be charged. Issuers will still have the ability to raise rates at any time for any reason. The bill only restricts increases in APR on your "existing" balance. The bank is merely required to give you six weeks notice of increases affecting "future" balances. (Big deal. They already do that. That's what the small print junk mail they send out is all about.)
Bonus Loophole: The Bill forgot to mention variable rate interest. Oops. Variable-rate cards will not be covered by the new law, so banks can change your interest rate whenever they want. By the time the law goes into effect, most credit cards will have variable rate interest, which will change monthly. No notice required.
In fact, Bank of America has already notified customers that they will no longer have fixed-rate cards. JPMorgan Chase, the largest volume issuer, will switch all their cards to variable rates in August. Most banks will follow suit -- since this would allow them to ignore the most important rules in Credit Card Reform.
Vague Language: That's one thing the Credit Card Reform Bill has lots of. The wording of the new law leaves room for a loose interpretation of some rules. For example, the law requires penalty fees to be "reasonable and proportional to the omission or violation." It's up to the bank to decide what "reasonable" means.
The law also requires promotional rates to last at least six months. But, six months from what date? The date of the first charge? The date of the first payment? The date the offer was made? The banks will decide.
The "Deadbeat" Solution
For those of you who pay off your balance in full every month (we know how proud you are of that stunning achievement) your free ride is over. The banks know who you are. They even have a name for you: "Deadbeats." (The rest of us are known as "Revolvers.") Interest will begin to accrue from the day you use the card, rather than from the statement date. No more "grace -period" for you. You'll owe interest every time a bill arrives.
Furthermore, get ready for a hefty annual fee for the convenience of using your card the way you do. Banks say you can expect to pay at least $50 to $100 a year (or more if you're ever a day late or a dollar short). Oh, and those Points and Perks you're getting? They're getting drastically scaled back and will expire quickly. Make one mistake and you'll be stripped of them entirely.
Yep, Credit Card Reform is going to punish you too, even though you "did everything right."