Hearing of U.S. Senate Committee on Banking, Housing, and Urban Affairs - "Examining the Current Legal and Regulatory Requirements and Industry Practices for Credit Card Issuers With Respect to Consumer Disclosures and Marketing Efforts."
Thank you, Mr. Chairman. I want to welcome both Senator Feinstein and Senator Akaka to today's hearing.
They are both champions of financial literacy and consumer rights and they will add significantly to our discussions on the subject of credit cards and consumer debt.
It is quite fitting that we are taking some time to discuss this issue again. On the heels of Congress' decision to pass the bankruptcy bill - a bill that was supported by a broad bipartisan group of legislators - it is important for us to continue our focus on how we can improve the disclosures that banks and credit card companies make to their costumers.
However, we should continue to move forward on increasing financial literacy.
Many would agree that education is the silver bullet for us in so many areas and that is certainly true when it comes to our personal financial health. I look forward to seeing the Treasury Department's upcoming report on financial literacy, but we already know that Congress and the President are not investing the kind of money in this effort necessary to be successful.
I strongly supported the establishment of a national uniform standard for our credit system - one that would ensure greater consumer access to and control over credit information that would provide enhanced protections against identity theft, and, establish a groundbreaking new role for the Federal government in financial literacy and education promotion.
I was pleased to sponsor Title V - the Financial Literacy component of the FCRA legislation that we passed more than a year ago.
Because of this title, there is now a national financial literacy commission charged with developing a national strategy on financial literacy, setting up a one-stop consumer website and 800 number, and guaranteeing that we streamline and coordinate our government's financial literacy efforts.
I also authored an FCRA provision that requires the FTC to study common financial transactions that are not generally reported to credit reporting agencies and recommend ways to encourage the reporting of these transactions. This is important because it will help the government and credit reporting agencies develop better ways to measure the creditworthiness of lower income working families.
I also want to say that I believe that one thing that has made our economy more robust over the past 20 years has been the increasing access that people have to credit.
I am committed to ensuring that people have access to credit and I am going to continuing working to ensure the heath of our consumer credit markets.
For one, I am concerned about taking a heavy handed approach to oversight that may lead to the regulation of interest rates and fees that ultimately limit the ability of banks to extend credit to higher risk consumers.
That being said, it is important that we make sure that credit cards companies are treating people fairly.
It disturbs me that there are reports that some companies are increasingly trapping unwitting consumers in a labyrinth of late fees and rising interest rates.
We must consider the issue of fair play. People can act rationally only when they have all the information that they need to make a decision. Senator Akaka has introduced a bill that would provide additional information to consumers, information that consumer advocates are adamant will help consumers understand the high costs of holding credit card debt.
I supported his amendment on this issue when it was offered to the bankruptcy bill because I believe that reasonable disclosures can help bridge the gap between available information about how our credit cards work and the need to make informed decisions.
Also, I continue to be concerned about credit card marketing to our college aged kids.
The marketing to our students is not necessarily a bad thing. Credit cards used by students can be very beneficial. They can provide students with an opportunity to learn to manage money. And, they can offer students an opportunity to build good credit ratings.
However, this is not always what happens. Indeed, we are seeing numerous incidents where the ultimate result is that the students end up racking up thousands of dollars of debt.
That is why I support Senator Dodd's efforts to ensure that if a credit card company wants to issue a credit card to a student under the age of 21, the student must have the ability to repay his or her debts, must attend a credit counseling course, or must identify an individual - presumably a parent - who is willing to accept joint liability for the credit card balances. This is both common sense and good underwriting.
While we have done a significant amount of work to improve disclosures and transparency there is always room for improvement. I believe the Committee, however, should be careful that we do not unintentionally restrict credit to vulnerable segments of our population when considering our options.
Mr. Chairman, thank you again for calling this hearing and I look forward to hearing from our witnesses today.