Nine months after President Barack Obama signed into law the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, some major reforms are finally going into effect.
“For too long, credit card companies have had free rein to employ deceptive, unfair tactics that hit responsible consumers with unreasonable costs. But today, we are shifting the balance of power back to the consumer and we are holding the credit card companies accountable,” said the President on Monday.
Due largely to a nationwide meltdown of the credit system over the past few years, the CARD Act was put in place to do things like prevent creditors from charging customers over-the-limit fees, not giving customers enough time to read and review their bills and levying on them simultaneous arbitrary interest rate increases and interest charges on debt paid on time.
Calling them “common-sense rules,” Treasury official Michael Barr trumpeted the law’s consumer protections during a conference call with reporters on Monday.
“[It’s] a way of ensuring fair rules of the road going forward, it is a way of letting competition occur based on quality and price, and not on shark practices.”
More importantly, the law puts an end to the days of credit card companies using fine print to mislead customers on key information about their cards. Barr said he believes the law will level the playing field.
“What we’ve put in place is a set of rules that permit good, strong competition, but based on fair terms…and not based on ‘hide the ball’ [tactics].”
However, as noble as the reforms seem, the White House nevertheless faces criticism from those who say the delay in implementing the law gave creditors too much time to game the system. Specifically, folks are pointing to the fact that many companies raised interest rates, created new card fees and closed accounts during the past nine months.
White House Senior Economic Adviser Austan Goolsbee, who participated in the call, shrugged off those concerns, arguing that companies would’ve taken those steps regardless of an impending law.
“We have just gone through the biggest credit crunch since 1929, so the fact that credit was difficult to get I don’t think was a secret, and I think that that’s pretty speculative to attribute it to the putting in of completely common-sense rules of the road.”
Goolsbee later suggested that the administration would continue to push for the creation of a consumer protection agency that would, among other things, help enforce the CARD Act.
In a statement released late Monday afternoon, House Financial Services Chairman Barney Frank (D-Mass.) blamed Republican lawmakers for providing cover to credit card companies.
“Republican objections in the Senate blocked the bill. Had the [Consumer Financial Protection Agency] CFPA been in existence we could have moved right away to block the banks’ egregious actions.”
