Credit Card Industry Reforms Are Coming (And It Only Took 30 Years)

America has been in the midst of a credit crisis for over a decade, a crisis that Bill Clinton did very little to address, that the Democrats as a whole all but ignored, and that the Bush GOP, pandering as usual to their Corporate America paymasters, did everything in their power to make even worse. Put together, what they have all done is let the financial industry loose to create chaos, a chaos which the mortgage debacle made infinitely worse and which now threatens the second global depression in 70 years.

Now - now - after the damage has been done and the economy is teetering on the edge of freefall, they are finally getting around to doing something about the massive rip-off credit card companies have been pulling on their customers since Reagan first began deregulating the industry.

Stricter regulation of the credit card industry will probably be approved by the end of the year, consumer advocates, members of Congress and banking officials said as the comment period on the Federal Reserve's proposed actions drew to a close last week.

Nearly 56,000 comments poured into the agency via e-mail and regular mail, a record response for any Fed proposal, said agency spokeswoman Susan Stawick.

Both the Fed and Congress are working to tighten rules on the credit card industry. The large response to the Fed's proposal comes on the heels of congressional action on the issue. The House Financial Services Committee moved Rep. Carolyn B. Maloney's Credit Cardholders' Bill of Rights out of committee on July 31. The measure would prohibit unexpected increases in the rates charged on pre-existing credit card balances, among other things. Observers said the New York Democrat's bill probably wouldn't pass the Senate this year because time is running out.

Nonetheless, the fact that the bill made it out of committee despite significant pushback from the banking industry and top Republican lawmakers sends a signal to the Fed that if it doesn't take action, Congress eventually will....

Yes. Eventually. If the Blue Dogs let them.

The list of credit card scams is as long as Wilt Chamberlain's arm. Hidden charges, improperly inflated charges, new charges added without notice, charges assessed even though the contract forbids them, and on and on and on. They have been gouging consumers without let-up for three decades, but the banking industry's lobbyists are some of the most powerful in Washington, the Pub Corp-Puppets were in power, and the Democrats were wooing the banking industry by explaining that they weren't going to croak the golden goose and then proving it with Joe Biden's assault on the bankruptcy laws.

But the Fed, for one, isn't going to kill the GG either, not really. The regs the Fed is proposing are far short of what's needed even if the conservatives and the bankers are howling in pain like little kids with scraped knees who think they're going to die.

The Fed's proposed rules would, among other things, specify when credit card issuers can increase interest rates on existing balances, keep them from calculating finance charges based on the average of balances over two cycles even if part of the debt has been repaid, and prohibit late fees on customers who were not given a reasonable amount of time to pay. The proposal also seeks to regulate overdraft protection on deposit accounts, requiring banks to let customers opt out of the service before assessing fees.

But the proposal does not, in all cases, ban the so-called universal default -- that is, raising a person's interest rate if he or she is late on an unrelated debt. It also does not address many arbitrarily high credit card fees.

(emphasis added)

It also does not address a regulatory structure so loose at this point that you could run a 747 through the loopholes, a looseness that amounts to nothing less than an invitation to defraud consumers. The Fed do a thing like that? It's a little much to expect, even though Bernanke himself has finally admitted that "a much tougher approach is needed to guard against what they call 'unfair or deceptive practices.'"

No shit, Sherlock.

It is long past time for this miserable situation to be dealt with. For quick action I would suggest the credit card companies be told that they're going to have to pay reparations to their consumers since we've been their virtual slaves for decades. The threat should be enough to get them to clean up their act, don't you think?