Providing for Consideration of H.R. 5244, Credit Cardholders' Bill of Rights Act of 2008

PROVIDING FOR CONSIDERATION OF H.R. 5244, CREDIT CARDHOLDERS' BILL OF RIGHTS ACT OF 2008 -- (House of Representatives - September 23, 2008)

Mr. WELCH of Vermont. Mr. Speaker, H. Res. 1476 provides for consideration of H.R. 5244, the Credit Cardholders' Bill of Rights Act of 2008 sponsored by Congresswoman Maloney. This rule provides for 1 hour of general debate controlled by the Committee on Financial Services. It also provides one motion to recommit with or without instructions.

Mr. Speaker, it is entirely appropriate that today, with the extraordinary spectacle of Wall Street titans coming to Congress hat in hand asking taxpayers for $700 billion, that we take up consideration of a bill of rights for Americans who hold credit cards. It is impossible for any of us who care to observe not to see the connection between the need for stronger consumer protections in the credit card industry today and the careless, reckless dismantling of consumer protections in the housing and financial markets in the past 30 years now known by the infamous term of ``deregulation.''

Mr. Speaker, as we know, credit serves a vital function in our economy. You cannot have a functioning capitalist economy without a functioning credit system. But the question that we face as elected representatives of the people who sent us here is whether or not we will act to provide a critical consumer protection to the credit markets and the protection to consumers who depend on them, or will we continue to leave this laissez-faire to the rules made up as they go along by the people in charge on Wall Street.

If this Congress had insisted on upholding consumer protections on Wall Street, if it had not simply stood aside to the proponents of the wild west, anything-goes markets that eviscerated the regulations, and instead kept consumers safe and the markets stable and strong, then we may well have averted the crisis that this House is now considering.

Maybe we would not be facing this extraordinary threat to the strength of the middle class who is working hard, paying their bills, but hanging on by their fingernails.

The challenge our economy faces now is largely a result of Wall Street abusing the credit system that we all need. And now ballooning credit card debt presents a similar threat to American consumers and possibly the markets.

Today, the House of Representatives will have the opportunity to adopt legislation sponsored by Congresswoman Maloney that would prevent the reoccurrence of a crisis in credit cards that is happening in our housing industry.

Let's just look at the situation of consumer credit as it exists today. In 2007, Mr. Speaker, 5.2 billion credit card solicitations were put in the mail, 36 solicitations per household. There are 1.22 billion credit cards in the United States. Outstanding consumer credit in the United States is approaching $1 trillion, $969.9 billion, to be precise, and the average credit card debt per household that carries a balance as opposed to those who simply use the credit card as a convenience to pay bills, that average balance is $17,103.

Does that sound sustainable and does this sound familiar?

Congresswoman Maloney's bill, H.R. 5244, institutes essential and overdue protections for the market and for the consumer by guarding against growing unmanageable debt and provides critical safeguards for consumers who have been relentlessly taken advantage of by credit card companies.

Specifically, the bill, among other things, ends unfair and arbitrary interest rate increases. Credit card companies raise interest rates at will, bait and switch, ends unfair penalties for cardholders who pay on time, requires fair allocation of consumer payments so that the payments are attributed to the highest interest rate first, protects cardholders from due date gimmicks, prevents companies from using misleading terms and damaging consumer credit ratings, protects vulnerable consumers from high fee subprime credit cards, and bars issuing credit cards to vulnerable minors.

The bill is the beginning of important reform in credit cards; the beginning of increased protection for consumers of credit card companies. H.R. 5244 is one side of the consumer protection coin.

The other side of the coin, which we're not taking up today but will hopefully get to, is for merchants who pay fees to credit card companies for every single credit card transaction, the so-called ``interchange fees.''

Mr. Speaker, in the United States, our credit card interchange fees are the highest in the entire world, accounting for as much as 2 percent of the cost of every credit card transaction, in some cases, a good deal more. By comparison, those interchange fees in the United States are almost three times what they are in Australia, four times what consumers and businesses pay in the United Kingdom.

These bloated interchange fees are passed on to the consumer. The average American family, in fact, pays an extra $300 a year on items they purchase as a result of credit cards. For example, interchange fees can add more than 8 cents to the price of a gallon of gas every time you fill up.

I and others have introduced legislation that may be considered at some future time, H.R. 6248, the Credit Card Interchange Fees Act, which would require credit card companies to disclose their interchange rates, terms and conditions to consumers, businesses and the public. In addition, the bill would empower the Federal Trade Commission to review these rates and rules and prohibit any practices that violate consumer protection and anti-competitive laws.

Mr. Speaker, Chairman Conyers on the Judiciary Committee also has important legislation being considered, the Credit Card Fair Fee Act. In the next Congress we'll have an opportunity to take up the Conyers bill and perhaps the Welch bill.

But today we have the opportunity to take up the first step, the work of Congresswoman Maloney, where she has scores of cosponsors, where she's worked tirelessly to bring this legislation to the consideration of the floor. I urge my colleagues to support this rule and to support this underlying legislation.

I reserve the balance of my time.

BREAK IN TRANSCRIPT

Mr. WELCH of Vermont. I thank the gentleman from Arizona.

Here is my understanding. The gentleman raises, I think, a good point.

The Armed Services Committee is working, as I understand it, on a bipartisan Department of Defense authorization bill. My understanding is the conclusion of the people who are most responsible on both sides of the aisle for that, on our side, expect that the Senate will not participate in a conference, so it will be a single bill that would be presented to this body under suspension.

So my understanding is that the folks who represent us, both sides of the aisle on the Armed Services Committee, have come to the conclusion that given the way the other body is going to handle this, that this is the most practical and effective way to proceed.

Since it's coming up under suspension, it's going to take a two-thirds vote, obviously. So whatever the reasons are that Members may want to reject that, they're going to have an opportunity to do it.

I will go on if you want, but I don't want to take too much of your time.

BREAK IN TRANSCRIPT

Source