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NEWS RELEASE
Jan. 15, 2009
ABA Media Contact: Peter Garuccio
(202) 663-5452
E-mail: pgarucci@aba.com
ABA STATEMENT ON THE CREDIT CARDHOLDERS’ BILL OF RIGHTS
by Edward L. Yingling, president and CEO
“Banks are fully committed to implementing the regulations adopted in December by the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration. These new regulations are unprecedented in scope and address concerns raised by consumers and policymakers, including the core issues addressed in the last Congress in HR 5244, The Credit Cardholders’ Bill of Rights.
“The new rules eliminate or dramatically restrict a number of practices, including ‘universal default,’ ‘double-cycle billing,’ and interest rate increases on existing balances. Provisions regarding disclosures, which underwent extensive consumer testing, fundamentally change how card issuers communicate with their customers and will ensure that consumers are able to better understand the terms of their cards and make more informed financial decisions.
“In effect, these new regulations completely rework the current credit card system and mark the beginning of a new market structure for credit cards.
“Creating a new structure will increase protections for consumers, but, as the Federal Reserve noted, could also result in increased costs for most card users and reduced credit availability. Furthermore, the Federal Reserve stated in December that such an overhaul will be a costly and time-intensive endeavor. In fact, the Federal Reserve stated that the 18-month implementation period already poses a significant ‘challenge’ for card issuers.
“Legislation that requires banks to implement such changes in a 90-day time period, as the bill introduced today would do, fails to provide sufficient time for banks to tear down the existing structure and build from the ground up a new and improved market system.
“Banks are already working to implement the new regulations within the Federal Reserve’s timeframe. Precipitous action, such as the implementation period in the new bill, could have serious and detrimental effects on consumers and the economy at a time when access to credit is in particular demand.”
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The American Bankers Association brings together banks of all sizes and charters into one association. ABA works to enhance the competitiveness of the nation's banking industry and strengthen America’s economy and communities. Its members – the majority of which are banks with less than $125 million in assets – represent over 95 percent of the industry’s $13.6 trillion in assets and employ over 2 million men and women.
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