Stricter Oversight Of Credit Card Issuers

Floor Speech

Mr. MAFFEI. Mr. Speaker, last week, the House passed the Credit Cardholders' Bill of Rights with an overwhelming bipartisan vote. This week the House will take up anti-predatory lending and mortgage fraud legislation. These bills are the next step as we work to rebuild our economy in a way that is fair and consistent with our values.

The Mortgage Reform and Anti-Predatory Lending Act of 2009 will curb abuse in predatory lending, a major factor in the Nation's highest home foreclosure rate in 25 years. The bill would outlaw many of the most egregious industry practices that have marked the subprime lending boom, and it would prevent borrowers from deliberately misstating their incomes to qualify for a loan.

But I would also like to get back to the Credit Cardholders' Bill of Rights, because that is such an important piece of legislation. As I mentioned, it passed 357-70 in this body, and I do urge that the other body take up this legislation as rapidly as possible.

The Credit Cardholders' Bill of Rights has had such broad bipartisan support because these credit card issuers and companies have benefited from an uneven playing field for so long. Regular people across the country and across my district have been victimized by these unfair and abusive practices, and Congress has now finally heard their stories. One of their stories was featured today in an editorial in the Syracuse Post-Standard, my hometown newspaper.

``Temple Baptist Church in Baldwinsville is the kind of customer that credit card companies used to reward with lower interest rates, not higher ones. The church paid its credit card bill on time and always paid at least the minimum due.

``But without explanation, Advanta Bank raised the church's interest rate from 18 percent to a whopping 36.9 percent. The higher rate had already been applied to $8,000 in new purchases, according to the Reverend Aaron Overton. He was shocked, just like thousands of citizens who have found themselves in similar positions.

``Fortunately for Overton and other consumers, their outcry was loud enough for Congress to pay attention. Last week, the House of Representatives approved the Credit Cardholders' Bill of Rights, which would prohibit sudden and retroactive rate hikes.''

Then the editorial goes on to say later that this bill is good, we need to do more, and that ``Congress needs to carefully examine how credit card companies conduct business, the kinds of interest rates they charge and what other schemes are being practiced that hurt customers. Overton says he probably could have gotten a better deal from the Mafia than from his credit card company. It does appear that some companies are shaking down customers as the economy worsens.''

Mr. Speaker, I will include the full editorial for the Record.

The point is this: We cannot any longer allow these kind of practices to occur. The model that makes this occur is the fact that at one point in our country, all lending, including credit card lending, was based on the fair principle that a bank or other institution would lend out money and then would make money on the interest and then the principal would be paid back.

But these credit card companies have now targeted people that cannot afford to pay back that principal and instead continue to get higher and higher fees. Yet they are too responsible, like Reverend Overton, to run away. He is not going to go anywhere. That church is not going to go anywhere. So there is no excuse to raise those rates and to have those fees, except that the company wants to make more money.

My concern, the concern of my newspaper at home and the concern of many of us, is that these credit card companies, before this bill fully takes effect, before the Senate is able to pass it, will take advantage of this all the more. But to them, Mr. Speaker, to them I have a clear message, and that is we have got our eyes on you and you shouldn't try it, because if you do, we are going to put this into effect much, much earlier, as our Chairman BARNEY FRANK has said.

I do not believe that you should have a lawyer to get a credit card. We have lawyers to get a new house, often when you have a house closing. But when it comes time to get a credit card, you shouldn't need a lawyer. These 30 page contracts, frankly, that people don't read, but I tell you, if you did read them, there is only a couple of sentences that matter. Those are the sentences that say the credit card issuer can do everything and the consumer can do nothing. This has to end. This practice has to end. We must assure fairness, and that means getting the Senate to pass a strong credit cardholders' bill of rights, and in both Houses and down the street at the
White House we have to keep an eye on this industry and make sure they don't take advantage of the customers further during this recession.

Mr. Speaker, I include the editorial from the Syracuse Post-Standard for the Record.

Bad Credit

Temple Baptist Church in Baldwinsville is the kind of customer that credit card companies used to reward with lower interest rates not higher ones. The church paid its credit card bill on time and always paid at least the minimum due.

But without explanation, Advanta Bank raised the church's interest rate from 18 percent to a whopping 36.9 percent. The higher rate had already been applied to $8,000 in new purchases, according to the Rev. Aaron Overton.

He was shocked just like thousands of citizens who have found themselves in similar positions.

Fortunately for Overton and other consumers, their outcry was loud enough for Congress to pay attention. Last week, the House of Representatives approved the ``Credit Card Holders' Bill of Rights,'' which would prohibit sudden and retroactive rate hikes.

The Senate is expected to pass similar legislation, according to Sen. Charles Schumer, D-N.Y., who said the Senate bill would contain ``important protections for consumers and is a giant step forward for anyone who uses a credit card.''

Let's hope so.

The credit card companies have been allowed to ride roughshod over their customers, employing jaw-dropping practices in a nation that supposedly operates by fair and transparent financial rules.

In fact, Congress needs to go farther than the House did in its bill.

As Rev. Overton pointed out, credit card companies should be made to refund the money they received from the outrageous fees.

State Attorney General Andrew Cuomo was able to work out such a deal recently with JP Morgan Chase & Co. It refunded $4.4 million to 184,000 cardholders Cuomo said were wrongly charged a monthly $10 fee.

Most of the regulations in the Credit Card Holders' Bill of Rights will not take effect until next year. But Rep. Dan Maffei, D-DeWitt, and Rep. Carolyn Maloney, D-Manhattan, sponsored an amendment that would ensure that one crucial provision takes effect within 90 days of signing that companies give customers 45 days notice before raising rates.

Maffei says the House bill is just the beginning of stricter oversight of credit card issuers. As a member of the House Financial Services Committee, he says he has heard complaints about credit company practices throughout his district. He plans to hold hearings in Syracuse this summer.

That's good. Congress needs to carefully examine how credit card companies conduct business, the kinds of interest rates they charge and what other schemes are being practiced that hurt consumers.

Overton says he probably could have gotten a better deal from the Mafia than from his credit card company. It does appear that some companies are shaking down customers as the economy worsens.

Lawmakers must put an end to such practices immediately.

Source