Washington, D.C. (AHN) - The Senate votes Tuesday on a bill adding consumer protections in the credit card industry. The American Bankers Association and some Republicans have warned that the new rules may worsen the credit crisis.
Lawmakers convene at 10:00 am to resume consideration of "any pending germane amendments," according to the schedule released by Senate Majority Leader Harry Reid (D-NV). The final vote will be held before the weekly party luncheons.
Sen. Christopher Dodd (D-CT), the chairman of the Senate Banking Committee had announced last week that he had reached an agreement with Sen. Richard Shelby (R-AL) on provisions of the bill.
The measure requires that payments from cardholders be applied first to the balance with the highest interest rate. It prohibits credit card companies from increasing rates in the first year after the account is opened. Card issuers thereafter are required to give a 45-day notice before increasing rates.
Companies must also mail statements at least 21 days before the bill is due, and must not charge interest on paid-off balances from the previous billing cycle, also known as double-cycle billing.
The House approved its own version of the measure about three weeks ago by a 357-70 vote. All except one of the 70 votes against the bill had come from Republicans, including House Minority Leader John Boehner (R-OH), Minority Whip Eric Cantor (R-VA) and Rep. Tom Price (R-GA), chairman of the Republican Study Committee, a group of House conservatives.
House Republicans had said that the bill would only make it more difficult for middle class Americans to use a credit card and ultimately exacerbate the credit crunch plaguing the economy.
The American Bankers Association has also warned that the "new rules may increase the cost of credit and make it less available for consumers and small businesses."
The group had also written Dodd and Shelby saying, "Lenders of all sizes have already taken extensive efforts to comply with these sweeping reforms, and if confronted by new requirements, will have even more difficulty serving their customers at a time their customers most need it."
President Barack Obama is seeking to raise consumer confidence and get credit flowing amid a deepening recession and rising unemployment rate, which went from 8.5 percent in March to 8.9 percent in April, the highest since September 1983.
Consumer credit also fell by 5.2 percent or $11.1 billion in March, the biggest drop since 1990, according to the Federal Reserve. Revolving credit in the first quarter declined by 6.5 percent.
The Fed had issued new credit card regulations last December, but those rules will take effect in July 2010.
For the record, I agree with the listed credit card reforms.
