Republican Opposition Impeding Congressional Credit Card Reform

Yesterday's diary, reported Congress is having hearings today to consider seriously needed reforms to our countries credit card practices - but now Republican opposition may stop its passing.  This legislation, which enjoys bi-partisan support from many Democrats and Republicans, is aimed at helping reduce the hidden interchange fee through increased transparency, but Reuters reports (bold added):

"A consumer group, the U.S. Public Interest Research Group, said it supports legislation because it would create a mechanism pressuring both merchants and the credit card companies to negotiate fees.

`The panel (would) not set prices or establish government price controls,' said Edmund Mierzwinski, consumer program director at U.S. PIRG. `It is an oligopolistic market in which a small set of cardholders dominate the market and establish a set of deceptive practices.

The bill has little chance of becoming law this year due to Republican opposition and the dwindling number of congressional work days left before the November election.'"

More details below.

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Visa Wants You To Pay More, State Dems Starting To Take Action

I hope you like paying for things you didn't know you were paying for, because you're about to get to do a lot more of that soon. Last month I noted that new MasterCard interchange fee rates were going to put the hurt on merchants and consumers alike. Well, this time it's Visa, and if they have anything to say about it (and they do) you'll be paying more at the register without even knowing about it.

But it's not all bad news. Thanks to the efforts by Carl Levin and Chris Dodd, targeting the "tricks and traps" and hidden fees by the big card companies (i.e. the banks -- J.P. Morgan Chase, Wachovia, Citi, etc) are starting to pay off, because state lawmakers are starting to introduce legislation to attack the issue.

Read on:

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Elizabeth Warren, Chris Dodd, GAO Agree: Credit Card Fees Are Too High

Hope you don't mind me flogging the subject of the Interchange Fee once again, but the LA Times ran a great story this week on the matter. Here's the lede:

Credit card companies have always taken their cut when a customer uses plastic, part of the cost of doing business electronically.

But a surge in the fees has sparked an intense dispute, with small merchants complaining that the higher charges are forcing them to raise prices and, in some cases, threatening to drive them out of business.

For more of the story, and details on how much this actually costing YOU, follow me below the fold:

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Carl Levin takes on the credit card industry

Disclosure note: I'm working with UnfairCreditCardFees.com to help raise awareness about the interchange fee, and cross-posting a slightly different version of a post that first appeared at Michigan Liberal today.

At this site and others, you might recently have heard about the credit card interchange fee and Sen. Chris Dodd's efforts to expose predatory lending practices.  And as I stated in that diary, I'm doing some work with UnfairCreditCardFees.com to shed some light on interchange fees and how they hurt every consumer in America.  Tomorrow morning (3/7) Sen. Levin is shedding further light on the credit card industry in a hearing  entitled, "Credit Card Practices: Fees, Interest Rates, and Grace Periods." According to the committee website:

It is the first of several Subcommittee hearings that will examine a variety of credit card practices that raise concerns. This hearing will focus on how credit card issuers apply interest rates and fees to consumer accounts. It will examine, for example, how credit card issuers select and apply interest rates and, for consumers carrying a balance forward, eliminate grace periods for repaid debts. It will also analyze high fees charged for late payments, over-the-limit charges, and other matters, including how those fees are assessed, how they add to interest costs, and how they contribute to consumer debt. In addition, the hearing will examine an industry practice requiring consumer payments to be applied first to balances with the lowest interest rates instead of to balances with the highest interest rates. The hearing will draw, in part, from a September 2006 GAO report detailing the finance charges, fees, and disclosure practices associated with 28 popular credit cards.

According to an American Banker (that is behind a pay door), the credit card companies are none too happy about this increased negative exposure and are worried about the fallout coming from this increased scrutiny coming from Capitol Hill.

Lobbyists said they worry that the hearing - featuring witnesses from Citigroup Inc., JPMorgan Chase & Co., and Bank of America Corp. - will draw significant negative press attention, putting a dent in their reputations and pressuring other lawmakers, like Senate Banking Committee Chairman Chris Dodd, to act. [...] Publicly, industry representatives said their hope is to try to rebut any charge that credit card companies routinely use unfair or deceptive practices. [...] But privately, industry lobbyists said they know credit card companies are under increasing scrutiny. Sen. Dodd has already promised a series of hearings in the Banking Committee on credit card practices, and several consumer groups are promoting an independent documentary, "Maxed Out," that chronicles consumer problems with credit card debt.

Hopefully these hearings and the efforts of Senators Levin and Dodd can serve to raise awareness amongst not only other lawmakers but also consumers whom the credit card industry has intentionally kept in the dark for far too long.  While the hearing will not be televised, the committee website will have streaming audio starting at 10 AM EST.

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