(Washington, DC) - U.S. Rep. Gary Ackerman (D-Queens/L.I.), Senior Member of the House Financial Services Committee, today made the following statement during a hearing held by the Subcommittee on Financial Institutions and Consumer Credit entitled “The Credit Cardholder’s Bill of Rights: New Protections for Consumers.”

“There is little doubt that providing consumers access to credit is a critically important component of our economy, particularly now, as our economy may have already tipped over into a recession. With a sputtering economy, Americans across the country are becoming more dependent on their credit cards to pay their bills and, sometimes, just put food on their tables. But, with practices such as a “any time, any reason” pricing, pay to pay fees, universal default, restrictions on paying off high balances – and I could go on and on – the consumer credit market seems to be unfairly weighted against credit card customers. Indeed, as the ramifications of relaxed underwriting standards and unrealistic repayment terms within the mortgage industry threaten millions of homeowners – and our economy as a whole – I believe that we in Congress must ask the question: Is practically universal access to credit, under the present conditions and practices, truly beneficial to our economy, or, if we continue along the path of permitting credit card companies to keep pushing the bounds of sound credit practices, will we soon find ourselves in the midst of another credit crisis?

It strikes me that, with all of the fees and stipulations attached with eye-bursting fine-print, credit cards are becoming like the carefully fine-tuned products of the tobacco industry; they have just enough nicotine in them to get you hooked, but not enough to kill you, at least not right away. Ensnared by unfair and unsound credit practices, American consumers find themselves suffering through years of mounting debt, increasing interest rates and, for many, financial ruin.

It is my contention that credit card users deserve the right to know, with sufficient notice, that their interest rate is increasing, and they deserve an explanation as to why. Credit card users deserve the right to decide how a bill payment is applied to their account if they have multiple outstanding balances. Credit card users deserve the right to pay their bills on-time in whatever manner they choose, without being charged extra. Furthermore, I believe that is critically important to the health of our economy to grant credit card customers these rights, as well as the others included in H.R. 5244, as soon as possible, so that we may prevent a second credit crisis in the near future. 

Aside from the crafting and introduction of the Credit Cardholder’s Bill of Rights, the most significant movement towards granting increased protection to credit card customers has been the proposed changes to Reg Z by the Federal Reserve. A clearer, more user-friendly disclosure template is certainly necessary, and we wait with serious consternation– as we have for over a year now – for the Fed to finalize its proposal.

But improved disclosure, while significant, is only part of the solution. After all, what good is increased disclosure if all it does is tell you all the ways your credit card company will screw you out of your money, but in larger font?

I support H.R. 5244 which, with some adjustments – I intend to offer an amendment to address pay to pay fees, for example – will provide much-needed protections to credit card customers. When implemented in tandem with the Fed’s Reg Z revision, I believe that the Credit Cardholder’s Bill of Rights will go a long way to ensure that the terms of credit card usage are fair and that the terms of credit card usage are fairly disclosed.

Once again, I would like to thank Chairwoman Maloney, both for scheduling this hearing and introducing this bill. I look forward to hearing from our witnesses.” 

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