House Dem to Offer Credit Card Legislation this Week

The chair of the House subcommittee that oversees legislation governing credit card issuers said Monday that she will be introducing a set of best practices for the industry after getting feedback from banks and consumer groups.

Rep. Carolyn Maloney (D-NY), chair of the House Subcommittee on Financial Institutions and Consumer Credit, said that she planned to offer legislation this week to curtail the rise in interest rates and fees card issuers charge to consumers.  She announced her intentions in a press briefing after a meeting Monday with representatives from the credit card industry, consumer groups, and fellow lawmakers.

The meeting was attended by JPMorgan Chase, Citigroup, Bank of America, Discover, Capital One, and American Express, in addition to a representative of the Consumer Federation of America, according to various media reports.  Two of Maloney’s peers, House Financial Services Committee Chairman Barney Frank (D-MA) and Rep. Michael Castle (R-DE), also attended the meeting.

At issue was a seeming failure on the part of card issuers to notify cardholders when their interest rates adjust and when the issuers charge fees for late payments and over-charges.  Several of the issuers noted said that they had ended such practices known as universal default and double-cycle billing. Travis Plunkett, legislative director at the Consumer Federation of America, said that ending universal default charges and double-cycle billing was not enough and that the issuers had to change their behavior in other areas.

Plunkett last week testified to the House Financial Services Committee on federal consumer protection in financial services. Plunkett stressed that the Federal Reserve has already proposed stricter guidelines on card issuers, but that Congress needs to go further. The Committee heard testimony last week primarily from consumer groups.  The meeting initiated by Maloney Monday was designed to get the banks’ perspective.

The Subcommittee on Financial Institutions and Consumer Credit operates under the Financial Services Committee.

On Monday, Castle said that while it is important to protect consumers through better notification, the subcommittee must be careful to not over-legislate the consumer lending industry.