Advancing the Credit Card Reform Act effective dates to December 1, 2009.
When you enact economic policy legislation, setting the effective date is very important. Usually, you want to avoid a rush to market by the first to hear while you're in the middle of legislating, so you choose the date of the first public announcement. Often you set the date of enactment, when the president signs the bill into law because only then is it certain the law will be put in place. Retroactive effective dates are a no-no, because they trap people without warning, particularly tax increases on activities that have already occurred. Sometimes you set a future effective date to allow those affected time to comply. That was the thinking behind the Expedited CARD Reform for Consumers Act of 2009 that President Obama signed into law on May 22, 2009 with effective dates in February and August of next year. However, banks are using the interim to jack up credit card interest rates.
This afternoon, House Financial Service Chair Barney Frank (D-MA) and Subcommittee Chair Carolyn Maloney (D-NY) introduced H.R.3639 to move up those effective dates to December 1, 2009. Rep. Maloney stated, The "Pew Charitable Trust reports that interest rates have spiked by an average of 20% on credit cards representing more than 91% of the $864 billion in outstanding credit card balances. It's clear that credit card companies are taking advantage of this period between the signing of my bill and the current effective date. The breadth and depth of the rate hikes happening now point to the need for faster consumer protections. Americans need relief now." I couldn't find the Pew report. Maybe it will be posted soon. I'd be grateful if anyone finds it and posts the link in a comment.
There's little doubt the House will pass H.R.3639 soon. Senate passage is likely within a few weeks, but it will depend upon obtaining 60 votes to overcome bank opposition.
"In a Pew report to be
"In a Pew report to be released next month, researchers reviewed the lowest advertised rates of nearly 400 credit cards and found that they rose two percentage points, a 20 percent increase, since December. At the same time, the target funds rate at which banks lend to each other fell by 0.75 points to nearly zero."
http://www.pewtrusts.org/news_room_detail.aspx?id=54569
Pew report
Milton:
Thank you very much for the link to the advance notice of the Pew Report.
Pete
Credit card surprise?
Is anyone surprised by this?
When you curtail the ability of employers to fire employees, you increase the cost to them of hiring, and they employ fewer. Does anyone think we lack data on this?
When landlords are denied the ability to raise rents and end leases, by rent regulations here in NYC and elsewhere, their cost of renting goes up, so rental apartments go off the market (become co-ops or into the owner's personal use, if not abandoned) and market rents for available apartments increase. Economic common sense and overwhelming empirical data agree!
Now when politicians restrict the ability of credit card companies to change their rates flexibly up as well as down -- and ban a host of fees they charge -- what do we expect will happen? Maybe ... the cost to card issuers of issuing unsecured credit will go up so credit card rates will go up, and cards will become less freely available than before? This is a surprise?
My understanding is the credit card industry is very competitive -- extremely so in fact. I can go to Bankrate.com, Creditcards.com, or a bunch of other web sites and see competitive offers from a zillion of them lined up right in front of me to compare.
Has there been any serious analysis indicating to the contrary about the industry: market concentration, anti-competitive cartels or the like? So monopoly excess profits exist in it?
If so, I've missed it. If not, then the competitive-level income lost to the industry by legislators banning given fees and rates has to be recouped in some other way, by raising other fees and rates, and giving out fewer cards to those with the greatest credit risk. Virtually QED.
Yet it's always a shock to politicians how price controls always work out exactly the same way as they have always worked out before.
Details details
Pew Study overlooks the small fact that chargeoffs have increased over 460 bps in the last year.
So let's do the math...
Interest rates up 200 bps
Funding costs down 75 bps
Good = 275 bps
Bad = 460 bps
Net bad = 195 bps ---> shouldn't interest rates have gone up even more???
Of course Barney and Carol can't do math, heck when was the last time they balanced a budget.
re
When you curtail the ability of employers to fire employees, you increase the cost to them of hiring, and they employ fewer. Does anyone think we lack data on this? Please provide information over it. Provide links to related topics if possible.