Credit Card Legislation Passes in Senate

categories: Bailout, Federal, Government, Inequality, News, Policy, stimulus, The Economy

Published May 19, 2009 @ 01:26PM PT

The Senate voted overwhelmingly on Tuesday to put new restrictions on the credit card industry, passing a bill whose backers say will make card-issuers spell out their terms in fewer words, using plain English, and treat customers more fairly.

This follows a similar House bill. After the differences between the two are worked out, a final bill goes to Obama for signature.

Frankly, I'm surprised it passed so quickly. This must be the give-away legislation for voters so as to distract us from the on-going bank bailouts and inadequacies in the housing rescue bills and stimulus. Not to mention the potential taxpayer subsidy behind this as well.

First, here's some data I didn't know:

Credit card debt has increased by 25 percent in the last decade, with delinquency rates up by more than a third since 2006, according to statistics cited by the White House. Americans pay $15 billion in penalty fees a year, accounting for about 10 percent of the industry’s revenues. About one-fifth of those carrying credit card debt pay more than 20 percent in interest.

The Times also has a piece today on how card holders with good credit and payment records may see their fees rise in response to the banks' new inability to rip off the more unstable among us. It's a curious piece, talking about how good payers have until now been getting a "free ride" but also, I think, trying to incite outrage among those of us with good credit histories. It also harkens back to the olden days of credit issuing when only people with good credit had access to it.

A time, I'd add, when there was a lot less wealth inequality in the U.S. I, for one, am willing to pay more for greater stability across the market, though I'm less enthused about subsidizing the banks' outsized profits that they've gotten used to since usury laws were relaxed in the 1980s. And until Obama reigns in these same old banks, then I suspect that that's exactly what I'll be doing.

(Photo by liewcf)

Share this Post

Comments (5)

Funny, I was just about to write about this. :)

I'm surprised you're surprised - if we have a foreclosure crisis... wouldn't it stand to reason that we have a debt problem that includes credit cards as well? Of course credit card use has exploded; it kind of had to, since many people could get easy credit, and had no other way to cover basic expenses.

I think the bill passed because it's a wash; in exchange for some mild controls - guys, you have to let people know in advance before you rob them! - the credit industry gets free rein to right size credi. That means many people will see rates rise (with notice!), many will be dropped, and in general... we're simply guaranteeing that whatever economic recovery we'd get we'll be further off then we thought. Without access to easy credit card debt, many people cannot spend their way out of this recession.

In particular, I think the definition of "good credit" is abou to get harder - it's not, necessarily, going to be "good credit" any longer to be carrying multiple cards with large balances (Amex is leading the way in clamping down on its multiple cardholders, something it favored just a year or two ago), and we may see people going back to using credit where it really should (in theory) be used - large purchases, non-necessities, vacation, etc - and not the groceries, or Starbucks, or such. It'[ll be painful... but in the end, it's probably the healthy step we needed. I think what concerns me is that we've moved to end the debt culture in this backdoor, consumers-last, kind of way.

Posted by NYC Weboy on 05/19/2009 @ 02:11PM PT
- Report close
  You must be signed in to report content.
- Reply
- Like
Reply to thread
For your comment to be published, you will need to confirm your email address after submitting your comment. In the process we will also create a Change.org account for you so you can track this and future conversations. Don't worry - we won't spam you. We just want to promote constructive dialogue and find that people are more respectful when they are not anonymous.

If you already have an account, click here to log in.

First Name:

Last Name:

Email:

Create Password:

reply to thread started by by NYC
Check Spelling
- Email me when there are new posts to this thread
- Comment Policy
Cancel Reply
I'm not surprised we have a bill, I'm surprised it passed at all; I just assumed the industry would shut it down. But then I came to a similiar conclusion as you.

Your "I think the bill passed because it's a wash" = my "This must be the give-away legislation for voters so as to distract us..."

Posted by Leigh Graham on 05/19/2009 @ 03:51PM PT
- Report close
  You must be signed in to report content.
- Reply
- Like
For your comment to be published, you will need to confirm your email address after submitting your comment. In the process we will also create a Change.org account for you so you can track this and future conversations. Don't worry - we won't spam you. We just want to promote constructive dialogue and find that people are more respectful when they are not anonymous.

If you already have an account, click here to log in.

First Name:

Last Name:

Email:

Create Password:

reply to thread started by by Leigh
Check Spelling
- Email me when there are new posts to this thread
- Comment Policy
Cancel Reply
From what I have seen for the last 30 years, what should never have happened was a rediculous loosening of credit by the credit card companies. I hope They correct that and issue a lot less people cards. When I was younger I was issued a $10,000 card when I made under $30,000! I was $5,000 in the hole before the light went on! Many people should not have cards at all, even more should have cards with much lower limits. People Who pay their bills deserve lower interest, not to be subsidizing those Who do not.

Posted by Charlie Reed on 05/21/2009 @ 10:14AM PT
- Report close
  You must be signed in to report content.
- Reply
- Like
For your comment to be published, you will need to confirm your email address after submitting your comment. In the process we will also create a Change.org account for you so you can track this and future conversations. Don't worry - we won't spam you. We just want to promote constructive dialogue and find that people are more respectful when they are not anonymous.

If you already have an account, click here to log in.

First Name:

Last Name:

Email:

Create Password:

reply to thread started by by Charlie
Check Spelling
- Email me when there are new posts to this thread
- Comment Policy
Cancel Reply
Leigh, on this subject, do the new rules require closer scrutiny of applicants so as to prevent so many people from falling into the same trap I did when I was younger?

Posted by Charlie Reed on 05/21/2009 @ 07:43PM PT
- Report close
  You must be signed in to report content.
- Reply
- Like
Charlie, I'm not sure, I'll have to check. I think yes, that it will be harder to market to certain age groups. Whether that's effective or not we'll see.

Posted by Leigh Graham on 05/21/2009 @ 07:51PM PT
- Report close
  You must be signed in to report content.
- Like
Reply to thread
For your comment to be published, you will need to confirm your email address after submitting your comment. In the process we will also create a Change.org account for you so you can track this and future conversations. Don't worry - we won't spam you. We just want to promote constructive dialogue and find that people are more respectful when they are not anonymous.

If you already have an account, click here to log in.

First Name:

Last Name:

Email:

Create Password:

reply to thread started by by Charlie
Check Spelling
- Email me when there are new posts to this thread
- Comment Policy
Cancel Reply

Add a Comment

For your comment to be published, you will need to confirm your email address after submitting your comment.

If you already have an account, click here to log in.

First Name:

Last Name:

Email:

Create Password:

Comment

Check Spelling

Email me when there are new posts to this thread
Comment Policy

Comments on Change.org are meant for further exploration and evaluation of the ideas covered in the posts. To that end, we welcome constructive comments. However, we reserve the right to delete comments that are offensive, abusive, or off-topic; that contain ad hominem attacks; or that are designed to subvert or hijack comment threads rather than contribute to them. Repeat offenders may be permanently removed from the site at our discretion.

Author

Leigh is a PhD candidate in urban planning at MIT, and a consultant on U.S. Gulf Coast recovery. She sits on the Board of the Allston-Brighton Community Development Corporation in Boston, and has worked with non-profits, foundations and local governments on policies and programs aimed at reducing urban poverty and inequality.