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New Limits Imposed on Credit Card Companies
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In written comments submitted to the three agencies in August, Gregory Baer, deputy General Counsel of Bank of America, said that according to industry data, credit lines would drop by an average of about 21 percent, taking $931 billion of available credit out of the market.
J.P. Morgan Chase officials declined to comment yesterday but said in their written comments that industry losses could result in a nearly 12 percent increase in annual percentage rates to an average of 16.58 percent.
Several consumer advocates and members of Congress said the card companies were trying to scare regulators into watering down the rules. They also pointed out that in recent months, banks have been amending terms on existing accounts while scaling back on credit card offers.
"Who are they kidding? They're already raising rates and cutting credit lines," said Rep. Carolyn B. Maloney (D-N.Y.), whose Credit Cardholders Bill of Rights, which mirrored the Fed's proposals, passed the House in September but was not voted on in the Senate. "They've fought these regulations tooth and nail, even before this crisis. Now, even though the cost of money is at record-breaking lows, they're complaining."
Maloney and other members of Congress said they intended to propose bills next year that would make into law the rules being voted on today.
Sen. Christopher J. Dodd (D-Conn.), who proposed a bill this year that would have extended even more protections to consumers, said that for the next Congress, credit card reform would be a top priority for the Senate Committee on Banking, Housing and Urban Affairs, which he leads.
"To restore our economic stability, we must stop credit card companies from ripping off their customers and driving them into deeper and deeper debt," he said. "While I expect the Federal Reserve's rules to be a significant step forward in addressing this issue, I believe we need a strong law in place to protect consumers from unfair credit card practices including 'anytime any reason' rate increases, universal default, excessive and unreasonable fees, and marketing targeted to young consumers."
