Federal Reserve Board Seeks Input From Consumers About Unfair Credit Card And Overdraft Practices
Thursday, July 24, 2008
The U.S. Federal Reserve Board (FRB) seeks input and feedback from consumers about its proposed new rules to limit unfair credit card practices. According to the press release:
"The proposed changes to the Board’s Regulation AA (Unfair or Deceptive Acts or Practices) would be complemented by separate proposals that the Board is issuing under the Truth in Lending Act (Regulation Z) and the Truth in Savings Act (Regulation DD)."
To make these changes, the FRB is working with the FTC (Federal Trade Commission. The FTC Act includes five protections for consumers who use credit cards:
The proposed new rules also require banks that make credit offers with multiple interest rates or credit limits to disclose in the offer the factors that determine whether a consumer qualifies for the lowest rate and highest credit limit.
I encourage all consumers to submit feedback online to the FRB. Scroll about two-thirds down the page and click on the "Submit Comments" link under all three regulations. The deadline for feedback is August 4, 2008. The FRB has already received a lot of feedback, but more is needed.
The proposed "new" regulations are a good first step in the right direction. Most of these rules were lifted during the 1980's during the Reagan Presidency. The thinking way back then was that there was too much regulation and that business was suffering.
Before 1980, the maximum interest rate was about 18% and consumers didn't have to endure the variety of fees and abuses. Both major political parties parties participated in the removal of key regulations governing banks and financial institutions. 27 years later, we consumers have direct experience with the results of that de-regulation... the myriad of credit card fees, abuses of consumers, and unfair lending practices.
Sure, some consumers need to expect personal responsibility for taking out loans they knew they couldn't pay, or didn't take the time to understand the fine print. Similarly, not all lenders engaged in predatory lending practices. My point: arguments about personal responsibility should not give predatory lenders a free pass. There's enough blame to go around. Both sides need to accept responsibility.
There's that familiar saying that, "total power corrupts totally." Too much de-regulation allows companies to exercise their newly granted power and ultimately abuse consumers, which we have seen. A better balance between regulation and total de-regulation needs to be found. It exists, but do we, as a nation, have the will?
If you are unfamiliar with that history, or want a refresher, watch this Bill Moyers interview with author and journalist William Greider. It's part of the Moyers Journal episode "The Mortgage Meltdown." I strongly encourage everyone to watch it. Check your local PBS affiliate for broadcast times, or get the DVD when it's available.
Very intersting post. I really enjoyed reading it.
Posted by: Sonny | Sunday, July 27, 2008 at 05:17 PM