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US House passes pro-consumer credit card bill

(Agencies)
Updated: 2009-05-01 13:21

Edward Yingling, president and CEO of the American Bankers Association, said the group "strongly believes that any additional legislative efforts should strive to achieve the right balance between enhancing consumer protection, and ensuring that credit remains available to consumers and small businesses at a reasonable cost."

"We continue to believe that more work needs to be done to achieve that balance," he said.

Supporters of the bill also drew on the economic crisis to make their case.

"Americans deserve a fair shake," said Ed Perlmutter, D-Colo. The credit card industry "has taken advantage of millions of vulnerable Americans."

Tape put up by demonstrators that reads 'Foreclosure Free Zone' is seen outside a foreclosed home in Elmont, New York, April 9, 2009. [Agencies]

Rep. Carolyn Maloney, D-N.Y., the bill's chief sponsor, said the changes were needed because "many people are turning to their credit cards because they have lost their jobs."

The bill's boosters are tapping into public anger over corporate excesses and the conduct of banks and other companies receiving billions of dollars in taxpayer money.

"At a time when millions of families continue to struggle to make ends meet, additional safeguards are needed to ensure consumers are not being saddled by questionable industry practices," the powerful AARP, the lobbying group representing seniors, said in a statement supporting the bill.

Obama met at the White House last week with executives of the credit card industry and made clear he wants to sign a bill into law. And a day before the House vote, Treasury Secretary Timothy Geithner convened a meeting with Maloney and representatives of consumer and civil rights groups.

Full Coverage:  World Financial Crisis Related readings:  Obama to meet credit card execsin reform push  Confidence returning to US credit markets  White House unveils plan to unclog bank credit  Obama tries to loosen credit for small businesses

"We need new commonsense rules of the road to establish a more fair, transparent, simple consumer credit market," Geithner said in a statement issued Thursday. "This bill is a major step toward that goal."

The administration is advocating stricter practices that could crimp banks' revenue at the same time the government is shoring up the financial institutions with hundreds of billions of dollars in bailout aid.

The credit card changes could cost the banking industry more than $10 billion a year in interest payments, according to a study by the law firm Morrison & Foerster.

Amid the recession and rising job losses, consumers -- even those with strong credit records -- have been defaulting at high levels on their credit cards. Banks already battered by the mortgage and credit crises have been bleeding tens of billions in red ink from the losses.

US credit card debt has jumped 25 percent in the past 10 years, reaching $963 billion in January, according to figures from the White House. The average outstanding credit card debt for households that have a card was $10,679 at the end of 2008, according to CreditCard.com, an online market.

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