Credit Cardholders' Bill Of Rights Act Of 2009 - Continued
Floor Speech
BREAK IN TRANSCRIPT
Mr. WYDEN. Mr. President, in the last Congress there was a Wyden-Obama amendment to better protect the rights of those who have credit cards in our country. My original cosponsor has obviously moved on and is doing important work for our country at 1600 Pennsylvania where he continues to advocate for the rights of consumers.
But I am very hopeful, and discussions are now taking place with Chairman Dodd and Ranking Minority Member Shelby, that it will be possible to get a bipartisan agreement here in the next day or so to advance the legislation that I and then Senator Obama originally proposed the last Congress.
I am very pleased that my original cosponsor this session is my new colleague from Oregon, Senator Jeff Merkley, who has a long record of advocating for the rights of consumers as well.
What Senator Obama and I originally proposed in the last Congress would direct the Federal Reserve to establish a safety rating system for credit cards. What then-Senator Obama and I sought to do was to make sure that cards with terms that are consumer friendly would be rated up, and cards with the tricky terms, the terms that are larded with qualifiers and exceptions and waivers, the legal mumbo jumbo that is so deceptive in the marketplace, those cards would be rated down. Under our legislation, credit cards with five stars would be deemed the safest; those with one star would be considered the least safe.
For example, credit card agreements that state that terms can be changed at any time for any reason would automatically get a one-star rating, because clearly that is the kind of consumer practice that has caused great difficulty for American consumers and is plain wrong.
I see our proposal operating much like the five-star crash rating system works for new cars. That system has worked. Americans have become better educated about how their car will protect them in a crash, and the rating system has helped incentivize the car industry as far as basic safety measures. When that rating system first came out, a lot of the cars only received one or two stars. But then the basic principles of competition and free enterprise kicked in, and now you have got many of those cars receiving four or five stars.
I am very confident that what then-Senator Obama and I sought to do 2 years ago will accomplish exactly the same thing with credit cards. Similarly, the safety star rating will increase competition between credit card companies over the fairness of the terms in their contracts, which will create an incentive for them to use fairer terms for more credit cards.
Credit card companies would have to display the rating on all of their marketing materials, billing statements, agreement materials, and on the back of the card itself. Consumers would be able to see the ratings for their card and how their card got that rating on a stand-alone Web site that was created and operated by the Federal Reserve. The Federal Reserve would be responsible for updating the star system and making sure that if new terms or practices come to market, those terms or practices would be assigned an appropriate rating.
Card issuers currently compete on their ability to advertise, mostly advertising their interest rates and annual fees, but not on the fairness of their credit card contract. Card issuers advertise their great interest rates and their great rewards, and then try to tell the consumers that their cards will cost less to use. But too often the important information is buried, the information about early deadlines and arbitrary rules, and what happens is that these cards end up costing millions of consumers more.
I believe--and Senator Merkley and I continue to advocate this cause, a cause that began in the last Congress--we believe that consumers deserve to have the tools that are needed to make informed choices about what they buy. That, of course, is what the marketplace is all about, getting information to consumers so they can make the choices that make sense for them. We believe our legislation empowers consumers to better make the marketplace work in this critical area of our economy.
I want to close by saying I have always felt that in a free society, Americans have a right to make decisions that, by perhaps someone else's assessment, would be wasteful or ill advised. In effect, we have in our country a constitutional right to be pretty foolish with our money. The problem with credit cards is that too often the marketplace fails the millions and millions of Americans who want to manage their money responsibly. Too often the major provisions of these credit card agreements require that you have an advanced legal degree--not just a basic law degree but an advanced legal degree--in order to sort out the terms. I do not think it is right to say that you ought to, in effect, be someone who spends their free time reading the Uniform Commercial Code in order to make sense out of these credit card agreements.
I am very hopeful that now with millions of our people walking on an economic tightrope, it will be possible to use classic free market principles to encourage better behavior. This is not heavy-handed regulation. This is not run-from-Washington micromanagement that is going to jack up somebody's credit card rates. This is about disclosure. This is about making sure that people in the marketplace understand what is in front of them, and that they are in a better position with objective information, in this case supplied by the Federal Reserve, overseen in a system operated by the Federal Reserve.
Consumers would be able to make better choices while forcing the credit card companies to compete not on who can best craft these technical legalistic terms of legal mumbo jumbo, but instead who best informs the public about their credit card choices and who addresses the rights of consumers with responsible practices.
I will continue to talk with Chairman Dodd and the ranking minority member Senator Shelby. They are familiar with what Senator Obama and I sought to do in the last Congress. I am glad this bill is on the floor. It is high time the rights of credit card consumers were addressed, that credit card consumers got a fair shake.
I think I have got the best possible partner, somebody who has been a long-standing advocate of consumers' rights, in Senator Merkley. We are hopeful in the next day or so that we will be able to forge an agreement with the chairman and the ranking minority member.
I yield the floor, and I suggest the absence of a quorum.
BREAK IN TRANSCRIPT
Mr. WYDEN. Mr. President, in the last Congress there was a Wyden-Obama amendment to better protect the rights of those who have credit cards in our country. My original cosponsor has obviously moved on and is doing important work for our country at 1600 Pennsylvania where he continues to advocate for the rights of consumers.
But I am very hopeful, and discussions are now taking place with Chairman Dodd and Ranking Minority Member Shelby, that it will be possible to get a bipartisan agreement here in the next day or so to advance the legislation that I and then Senator Obama originally proposed the last Congress.
I am very pleased that my original cosponsor this session is my new colleague from Oregon, Senator Jeff Merkley, who has a long record of advocating for the rights of consumers as well.
What Senator Obama and I originally proposed in the last Congress would direct the Federal Reserve to establish a safety rating system for credit cards. What then-Senator Obama and I sought to do was to make sure that cards with terms that are consumer friendly would be rated up, and cards with the tricky terms, the terms that are larded with qualifiers and exceptions and waivers, the legal mumbo jumbo that is so deceptive in the marketplace, those cards would be rated down. Under our legislation, credit cards with five stars would be deemed the safest; those with one star would be considered the least safe.
For example, credit card agreements that state that terms can be changed at any time for any reason would automatically get a one-star rating, because clearly that is the kind of consumer practice that has caused great difficulty for American consumers and is plain wrong.
I see our proposal operating much like the five-star crash rating system works for new cars. That system has worked. Americans have become better educated about how their car will protect them in a crash, and the rating system has helped incentivize the car industry as far as basic safety measures. When that rating system first came out, a lot of the cars only received one or two stars. But then the basic principles of competition and free enterprise kicked in, and now you have got many of those cars receiving four or five stars.
I am very confident that what then-Senator Obama and I sought to do 2 years ago will accomplish exactly the same thing with credit cards. Similarly, the safety star rating will increase competition between credit card companies over the fairness of the terms in their contracts, which will create an incentive for them to use fairer terms for more credit cards.
Credit card companies would have to display the rating on all of their marketing materials, billing statements, agreement materials, and on the back of the card itself. Consumers would be able to see the ratings for their card and how their card got that rating on a stand-alone Web site that was created and operated by the Federal Reserve. The Federal Reserve would be responsible for updating the star system and making sure that if new terms or practices come to market, those terms or practices would be assigned an appropriate rating.
Card issuers currently compete on their ability to advertise, mostly advertising their interest rates and annual fees, but not on the fairness of their credit card contract. Card issuers advertise their great interest rates and their great rewards, and then try to tell the consumers that their cards will cost less to use. But too often the important information is buried, the information about early deadlines and arbitrary rules, and what happens is that these cards end up costing millions of consumers more.
I believe--and Senator Merkley and I continue to advocate this cause, a cause that began in the last Congress--we believe that consumers deserve to have the tools that are needed to make informed choices about what they buy. That, of course, is what the marketplace is all about, getting information to consumers so they can make the choices that make sense for them. We believe our legislation empowers consumers to better make the marketplace work in this critical area of our economy.
I want to close by saying I have always felt that in a free society, Americans have a right to make decisions that, by perhaps someone else's assessment, would be wasteful or ill advised. In effect, we have in our country a constitutional right to be pretty foolish with our money. The problem with credit cards is that too often the marketplace fails the millions and millions of Americans who want to manage their money responsibly. Too often the major provisions of these credit card agreements require that you have an advanced legal degree--not just a basic law degree but an advanced legal degree--in order to sort out the terms. I do not think it is right to say that you ought to, in effect, be someone who spends their free time reading the Uniform Commercial Code in order to make sense out of these credit card agreements.
I am very hopeful that now with millions of our people walking on an economic tightrope, it will be possible to use classic free market principles to encourage better behavior. This is not heavy-handed regulation. This is not run-from-Washington micromanagement that is going to jack up somebody's credit card rates. This is about disclosure. This is about making sure that people in the marketplace understand what is in front of them, and that they are in a better position with objective information, in this case supplied by the Federal Reserve, overseen in a system operated by the Federal Reserve.
Consumers would be able to make better choices while forcing the credit card companies to compete not on who can best craft these technical legalistic terms of legal mumbo jumbo, but instead who best informs the public about their credit card choices and who addresses the rights of consumers with responsible practices.
I will continue to talk with Chairman Dodd and the ranking minority member Senator Shelby. They are familiar with what Senator Obama and I sought to do in the last Congress. I am glad this bill is on the floor. It is high time the rights of credit card consumers were addressed, that credit card consumers got a fair shake.
I think I have got the best possible partner, somebody who has been a long-standing advocate of consumers' rights, in Senator Merkley. We are hopeful in the next day or so that we will be able to forge an agreement with the chairman and the ranking minority member.
I yield the floor, and I suggest the absence of a quorum.
BREAK IN TRANSCRIPT
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