Merkley Applauds Obama Endorsement of Credit Card Legislation

Washington, DC – President Barack Obama today met with executives of credit card companies and expressed his support for congressional efforts to strengthen credit card reforms through legislation.  Oregon’s Senator Jeff Merkley, a member of the Senate Banking, Housing and Urban Development Committee, wrote to the White House earlier this week urging the President to take this step.

“Americans are hit every month with unfair penalties and fees that drown working families in debt.  The Senate Banking Committee has crafted comprehensive legislation to address these deceptive practices, and I am so pleased the President agrees that more needs to be done to protect consumers,” said Merkley.  “Now is the time for the full Senate to act and pass this important legislation.  Millions of American families are counting on us.”

While the Federal Reserve has issued new regulations addressing some of the worst abuses, those reforms would not go into effect until July 2010 – too late for many consumers who are already deeply in debt because of the economic crisis.  The Credit CARD Act would both speed up and strengthen reforms of the industry by enacting protections including:

• A broad prohibition on “universal default,” the practice of raising interest rates on a consumer for actions unrelated to the card in question;
• A requirement that payments beyond the minimum monthly payment be applied to balances with the highest rate of interest; 
• Prohibitions on fees based on the method of payment, be it telephone, mail, internet, or otherwise;
• A requirement that fees be reasonably related to the costs incurred;
• A cap on over-the-limit fees to once per billing period;
• A prohibition on charging interest on fees;
• A requirement to remove penalty rates following six months of good behavior; and
• Limits on the aggressive solicitation of young persons.

“At a time of economic turmoil, workers shouldn’t be worried they are carrying a fiscal time bomb in their wallet.  But too often they are – at any moment they can be hit with unfair fees or see their interest rates go sky high for no reason at all,” said Merkley.  “With the support of President Obama, we can defuse these time bombs and empower consumers.”