Small Town News

More must be done to stop Loan Sharking Inc.

---

Other Views

The Credit Card Accountability, Responsibility and Disclosure Act, signed into law last spring, was supposed to put an end to many of the deceptive practices that allowed credit card issuers to bleed customers dry.

The most important provisions went into effect earlier this week, but credit card companies have already found ways to evade the law. Congress and federal regulators need to do a lot more.

For starters, that means creating a strong and flexible Consumer Financial Protection Agency that could react quickly to all-too-common scams and evasions.

The bill that would create this agency has passed the House, but it is being stonewalled by Senate Republicans under heavy lobbying from the financial industry.

Congress passed the credit card law in response to growing public outrage about deceptive billing practices intended to maximize penalties and fees and drive up interest rates.

Constituents had seen their rates double without notice -- up to 30 percent or more -- even though they had paid their bills on time.

Many were saddled with debt they had no way of escaping.

The law took several important steps. It required issuers to give customers 45 days" notice before increasing interest rates. It limited what companies can charge in upfront fees.

And it outlawed the common practice of changing due dates from one month to the next with the aim of triggering lucrative late fees.

Lawmakers arid consumer advocates had especially high hopes for the provision that forbids companies from raising interest rates retroactively for purchases made in the past, except in a few specific cases. But a new analysis by the National Consumer Law Center, an advocacy group, suggests that companies may simply be rewording their contracts so that they can continue to collect retroactive increases by calling them something else.

Under some contracts, the center says, consumers are given cards with deferred interest plans that might never materialize or promised rate reductions that can be withdrawn if the customer pays even one day late. And the center found that some companies that prey on people with poor credit histories had reacted to the new federal fee limitations by charging interests rates of nearly 80 percent.

Congress cannot pass a new law for every new scam the industry comes up with.

What the country clearly needs is a strong, fully engaged Consumer Financial Protection Agency that protects Americans from abusive, deceptive and predatory lending practices.

Senate Republicans who continue to block this essential reform -- putting the interests of the financial industry ahead of American consumers -- should pay a political price for their misplaced priorities.

(This opinion article first appeared in the New York Times.)

Congress cannot pass a new law for every new scam the industry comes up with.



Copyright 2010 Turtle Mountain Star, Rolla, North Dakota. All Rights Reserved. This content, including derivations, may not be stored or distributed in any manner, disseminated, published, broadcast, rewritten or reproduced without express, written consent from SmallTownPapers, Inc.

© 2010 Turtle Mountain Star Rolla, North Dakota. All Rights Reserved. This content, including derivations, may not be stored or distributed in any manner, disseminated, published, broadcast, rewritten or reproduced without express, written consent from DAS.

More from Turtle Mountain Star