Last Friday afternoon, President Barack Obama and key personalities from congress gathered in the White House for the signing of the credit card bill.
The credit card bill is a controversial bill that aims to correct what many see to be the fraudulent and deceptive practices of the credit industry. Amidst the outcry of overburdened credit cardholders, the President and the Congress responded with a bill that curtails arbitrary interest rate increases, protects cardholders paying off debts, and demands more transparency from credit card companies, especially with their credit card agreements.
The bill has its share of supporters and detractors. Credit cardholders, the main group to benefit from the legislation, are excited to see what the bill can do for them. However, many see that more could have been done with the bill. The credit industry, the target of the bill's legislation, has been adamant that the passing of the bill will be detrimental – not only to the credit industry but to consumers themselves.
The President and the Congress have deliberated and seen to it that the credit card bill provides a middle ground for both sides of the argument. During the signing, President Obama stressed the point saying, “We're not going to give people a free pass. We expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives.”
Sen. Chris Dodd called the credit card bill “the strongest piece of consumer legislation that has been passed in Washington in a decade”. However, he also said that there is still a lot of work to do with regarding unfair credit card industry practices.
During a conference call last Friday, Sen. Dodd said that two major problem areas in credit industry practices still need to be addressed: unlimited interest rates and high merchant fees. The senator stated that there is still a need to create some kind of legislation that will put a limit on how much interest credit card companies can issue and on the fees that merchants have to pay to credit card companies when customers pay with plastic.
These two issues were already heavily debated when the credit card bill was being deliberated in the Senate. In the Senate, a proposal putting a 15% cap on interest rates was ultimately killed by the strong lobbying of the credit industry and by worries in the Senate that the proposal might ultimately kill the credit card overhaul package.
Sen. Dodd has not given up on these issues and is already making preliminary steps to pursue legislation on interest rate caps and regulation of merchant fees.