Geithner supports credit card bill
On the eve of a congressional vote on credit card reforms, Treasury Secretary Timothy F. Geithner urged lawmakers Wednesday to “change the rules of the game.”
He said that “deceptively complex” credit card rules “hurt responsible borrowers and threaten to turn lives upside down.” President Obama has criticized companies for jacking up interest rates and levying unexpected fees on customers.
The House is scheduled to vote today on a bill to impose tighter restrictions on an industry that collects about $15 billion in fees a year.
The House bill, supported by Obama, would ban industry practices such as raising interest rates on existing balances retroactively, assessing extra fees for card users who go over their authorized limits and marketing the cards to people younger than 18.
Companies also would have to notify customers 45 days prior to any rate increase and could no longer engage in “double billing,” the practice whereby consumers may be charged interest and fees on balances that have been paid on time.
In a statement defending the industry, Edward L. Yingling, president of the American Bankers Assn., said the legislation should “strike the right balance” between protecting consumers and assuring easy availability of credit.
“Well-intentioned legislation such as the ‘Credit Cardholders’ Bill of Rights’ could have the unintended consequences of limiting credit for responsible consumers and even making it more expensive,” he said.
Geithner, who spoke after meeting with consumer groups, civil rights advocates and Rep. Carolyn B. Maloney (D-N.Y.), a chief sponsor of the bill, said increased regulation of credit card practices was part of the Obama administration’s overall plan for creating a more transparent and balanced financial system.
With the current financial crisis partly fueled by irresponsible borrowing and lending, Geithner said, the failure “to constrain bad lending practices by banks and finance companies” has left working Americans with too much debt, he said, and contributed to the overall financial crisis.
“People have lost confidence in the quality and judgment of the leaders of many American financial institutions, and they need to work very hard to earn back that confidence,” Geithner said.
“Secretary Geithner definitely spoke about trying to add fairness to the system. And I think that’s all the average consumer is asking for,” said Ruth Susswein, deputy director of Consumer Action, who attended the meeting.
“We’re talking about things that can make a real difference in people’s lives. But their voices have not been heard,” she said. “Now, finally, those who can make a difference are standing up and saying it’s time to right this balance.”
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