Time for credit card reform

By Max J. Castro
maxjcastro@gmail.com

The folks who brought us the economic meltdown — the financial industry — are now fighting a pitched battle and paying millions of dollars to lobbyists to prevent the creation of a consumer finance protection agency.

The agency would regulate the vast area of consumer lending to prevent the myriad abuses that banks have been perpetrating on card holders and loans ever since the business was deregulated. Currently, the banks are gouging consumers out of their hard earned dollars through a plethora of devices, from usurious rates of interest to capricious penalties and fees.

It takes gall to bite the hand that feeds you but that is precisely what is happening here. U.S. taxpayers have spent billions of dollars to subsidize an industry that has turned around and bilks them in return.

The new law that would create the agency is being considered by the Senate Banking, Housing and Urban Affairs Committee chaired by Christopher Dodd. Naturally, the leadership of the Party of No, ranking Republican Richard Shelby, is skeptical. The credit card business is very profitable, thank you very much. Why ruin it with pesky regulations that would make it possible for consumers to understand what they are getting into and how they are being robbed blind?

The attempt by Republican Senators to block the consumer legislation follows the lead of the industry whose top lobbyists said: “This proposal will chill efforts to innovate and respond to consumer demand for beneficial products and services.”

In reality, the agency would chill the efforts by banks and credit card companies to invent ever-more sophisticated fine print provisions to bilk and bamboozle consumers. But, unlike the banks, the Republican members of Congress, who receive big campaign contributions from the banking industry, are not going to bite the hand that feeds them.

But there are 60 Democrats in the Senate, and that should make it possible for the legislation to pass even if there is a filibuster. Unless, of course, the industry also has a few Democrats in its pocket, a possibility that can hardly be discounted.

This seems like a good time for the holders of hundreds of millions of credit cards in the United States to flood Congress to demand the creation of a sharp-toothed consumer finance protection agency.