Reid: Democrats Protecting Consumers By Putting Fairness, Common Sense Back Into Credit Cards

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Washington, DC—Nevada Senator Harry Reid made the following statement today after the Senate passed the Credit Card Accountability, Responsibility and Disclosure Act, which outlaws hidden fees, misleading terms and other credit card company tricks and traps:

“When this credit card debate began, I heard from a woman in Nevada named Shelley Lyons.  Like many honest and hardworking Americans, Shelley played by the rules.  She was responsible.  Then, one day, out of the blue, her credit card company nearly doubled her rate.  Shelley understandably wanted out of her contract.  But the company said no.
“I heard from Shelley again last night.  This is what she wrote to me: ‘My husband has canceled his card and I will be paying off my card by taking a loan from my 401(k).  I felt so helpless and angry.  I’d rather take a lien against my retirement than let them have any more of my money.’
“Today the Senate stood with Shelley.  We stood up for consumers and stood up to abusive credit card companies.  We said that big banks can no longer take advantage of hardworking Americans.  We demanded that when Americans use a credit card – as almost everyone does almost every day – they no longer have to fear that they’ll be abused.
“This is just the latest example of how Democrats are looking out for Main Street.  In the last few weeks, we have cracked down on corporate and mortgage scams and helped more struggling homeowners keep their homes.  And in the coming weeks, we will continue to protect people like Shelley who keep our economy moving, and we will restore their confidence.”


Democrats believe we must help Main Street – not just Wall Street – if we are to stabilize our economy.  That’s why we’ve spent the past several weeks passing legislation to crack down on corporate fraud and mortgage scams, help more families keep their homes, save millions of taxpayers’ dollars by reining in out-of-control government contractors, and protect consumers from deceitful credit card companies.  Too many hardworking Americans have already lost too much; it is our job to protect them from losing even more.


Senate Overwhelming Passed the Credit Card Accountability Responsibility and Disclosure Act (CARD) to Aggressively Protect American Consumers from Unfair, Unjust and Unacceptable Credit Card Industry Practices. Between 1989 and 2006, US credit card debt rose from $221 billion to $876 billion. That’s a growth of 315%. The CARD Act reforms industry practices to protect Americans consumers and requires companies to be more transparent with consumers, increases notification requirements and limits exorbitant fees and penalties. The Senate passed the CARD Act with a vote of 90-5. [Center for Responsible Lending, accessed 5/4/09 <> ; Senate Vote #194]

CARD Act Prohibits Unfair Interest Rates Increases, Changes in Terms.  The CARD Act prohibits arbitrary interest rate increases and universal default on existing balances; requires card companies who increase a cardholder’s interest rate review that decision and decrease the rate if warranted; prohibits card issuers from increasing rates on a cardholder in the first year after a credit card account is opened and requires promotional rates to last at least 6 months.  The Act also stops companies from applying interest charges on debt paid on time, prohibits card companies from issuing late fees if the card issuer delayed crediting the payment; and requires that payment at local branches be applied the same-day. [Senate Banking Committee]

The CARD Act:

Ø      Stops Abusive Fees. [Senate Banking Committee]

Ø      Forces Credit Card Companies to Apply Payments to the Balance With the Highest Interest Rate First. [Senate Banking Committee]

Ø      Requires a 45-Day Notice Before an Interest Rate Increase. [Senate Banking Committee]

Ø      Requires More Disclosure to Card Holders When Credit Card Terms Have Changed. [Senate Banking Committee]

Ø      Increases, Strengthens Oversight of Credit Card Industry. [Senate Banking Committee]

Ø      Protects Young Consumers. [Senate Banking Committee]

Ø      Eliminates Declining Values, Hidden Fees in Gift Cards; Requires Gift Cards Have a Five-Year Life Span. [Senate Banking Committee]


 Senate Overwhelmingly Passed Fraud Bill to Protect Americans. The Fraud Enforcement and Recovery Act (FERA) takes aggressive steps to protect American consumers by expanding the criminal code to pursue the mortgage businesses that “were responsible for nearly half the residential mortgage market before the economic collapse, yet” remained “largely unregulated and outside the scope of traditional Federal fraud statutes.”  The bill passed with 92 senators voting yes. [Judiciary Committee Report on S. 386, 3/23/09; Senate Vote #171]

The Fraud Enforcement and Recovery Act:

Ø      Expands the Criminal Code to Include Mortgage Lending Businesses  [Judiciary Committee Report on S. 386, 3/23/09]

Ø      Protects Taxpayer Money in TARP, Stimulus Package  [Judiciary Committee Report on S. 386, 3/23/09]

Ø      Nearly Doubles FBI’s Mortgage, Financial Fraud Program to Investigate Fraud  [Judiciary Committee Report on S. 386, 3/23/09]

Ø      Increases Support for Prosecution, Investigation of Fraud Cases  [Judiciary Committee Report on S. 386, 3/23/09]

Ø      Strengthens Analytical, Investigative Capacities of HUD, Secret Service, US Postal Service  [Judiciary Committee Report on S. 386, 3/23/09]

Subprime Lending Investigations, Credit Expansion Both Funded in Omnibus Bill. “The measure also provides increased funding for consumer protection initiatives, including subprime lending investigations at the Federal Trade Commission and efforts by the Community Development Financial Institutions Fund to expand credit and provide financial services in underserved communities.” [CQ Bill Analysis, HR 1105]
Senate Overwhelmingly Passed Bi-Partisan Defense Acquisitions Bill Addresses Cost Overruns in Weapons Programs. This session, the Senate will take up S 454 which will reform the Pentagon’s weapons system acquisition. According to Senator Levin, “Overall, DOD’s 95 major defense acquisition programs (known as ‘MDAPs’) have exceeded their research and development budgets by an average of 40 percent, seen their acquisition costs grow by an average of 26 percent, and experienced an average schedule delay of almost two years. Last summer, GAO reported that cost overruns on DOD’s MDAPs now total $295 billion over the original program estimates, even though we have cut unit quantities and reduced performance expectations on many programs in an effort to hold costs down.”  93 senators voted in favor of the bill – not a single senator voted against it. [Congressional Record Pg S2366, 2/23/09; Senate Vote 186]


Senate Overwhelming Passed Housing Bill That Works to Prevent Mortgage Foreclosures. The Senate passed the Helping Families Save Their Homes Act of 2009 with 91 senators voting for the Act. The Act makes access to the Hope for Homeowners program more user-friendly so more Americans can participate. [DPC analysis, 4/30/09 <> ; Senate Vote 185] Specifically, the bill:

Ø      Lowers Fees for Participation in the Hope for Homeowners Program [DPC analysis, 4/30/09 <> ]

Ø      Streamlines Certification Requirements for Borrowers  [DPC analysis, 4/30/09 <> ]

Ø      Increases Loan Servicers Participation though Incentives  [DPC analysis, 4/30/09 <> ]

Ø      Targets the Program to Those Most in Need  [DPC analysis, 4/30/09 <> ]

Helping Families Save Their Homes Act also:

Ø      Increases Tools Needed to Prevent Foreclosures  [DPC analysis, 4/30/09 <> ]

Ø      Establishes a Nationwide Mortgage Task Force to Address Mortgage Fraud  [DPC analysis, 4/30/09 <> ]

Ø      Improves Enforcement Ability of FHA to Eliminate Bad Lenders  [DPC analysis, 4/30/09 <> ]

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