Last year consumers were besieged by dire economic news, yet they also received some good tidings — the promise of credit card reform. This year may prove to be a banner year for consumers as well, at least if Congresswoman Carolyn Maloney, D-N.Y., has anything to say about it.

At a glance
Name: Carolyn Maloney
Hometown: New York City (born in Greensboro, N.C.)
Education: Greensboro College
Career highlights:
  • Appointed Chair of the Joint Economic Committee in the 111th Congress, the first woman to hold that position.
  • Elected to the House of Representatives in 1993.
  • Former co-chair of the Women’s Caucus and advocate for women’s and family issues.
  • Senior member of the House Oversight and Government Reform Committee.
  • Chair of the Financial Institution and Consumer Credit Subcommittee of the Financial Services Committee.
  • Authored the Credit Cardholders’ Bill of Rights Act of 2008 and 2009.
  • Author of “Rumors of our Progress have been Greatly Exaggerated: Why Women’s Lives Aren’t Getting Any Easier” published May 2008.

In February 2008, she introduced the Credit Cardholders’ Bill of Rights Act of 2008 to the House of Representatives. In September, the bill passed in the House but never made it out of the Senate. In December, regulators, including the Federal Reserve, passed a series of rules to crack down on credit issuer abuses and to strengthen consumer rights.

According to Rep. Maloney, legislation is still needed to protect consumers in a lasting and comprehensive way.

To that end, on Jan. 15, 2009, she introduced a revamped Credit Cardholders’ Bill of Rights to the House of Representatives in the 111th session of Congress. The bill aims to further strengthen consumer rights and speed up the protections due to take hold in 2010.

The congresswoman took some time out of her hectic schedule to share her thoughts about this bill with Bankrate.

What led you to author the Credit Cardholder’s Bill of Rights?

I believe in the basic principle that a deal is a deal. However, too often in the credit card industry, consumers have found themselves on the short end of the stick, stuck with contracts that could change at any time and for any reason.

In a hope to return to basic fairness, I wrote the Credit Cardholders’ Bill of Rights.

This bill levels the playing field for consumers by protecting them from arbitrary rate increases on their existing balances and ends the most abusive practices currently implemented by the industry.

Why did Congress drag its heels in implementing reforms that protect consumers?

While the Credit Cardholders’ Bill of Rights failed to be enacted into law last year, we were successful in passing it in the House of Representatives by an overwhelming vote of 312 to 112.

In the end, I believe other issues in the larger economy took the spotlight away from the needed attention required to pass this legislation in the Senate.

How is it that the credit card industry has gotten away with abusive practices for so many years?

I believe that there has been a general attitude that through competition and the free market system, much of the financial world would regulate itself.

What we have found in the credit card industry, based upon consolidation of the industry and the complexity of consumer disclosures, is that many of these practices became unfair, deceptive and anticompetitive. When that happens, it is up to the government to fix the market failure.

Why must consumers wait until July 2010 before the rule changes?

Consumers will have these protections much sooner if I have anything to do with it.

I am planning on reintroducing legislation to move up the implementation date from July 2010, to three months after the passage of my bill.

With new regulations set to go in place in 2010, why is further action needed on credit card reform?

First, legislative action is needed to speed up implementation.

Second, regulation does not carry the same force of law that legislation does. It is too easy to change regulation, whereas legislation has much more staying power.

In light of the recent regulations to the credit card industry enacted by the Federal Reserve, et al., how does the 2009 version of the Credit Cardholders’ Bill of Rights differ from the previous version introduced last summer?

I reintroduced the Credit Cardholders’ Bill of Rights in the 111th Congress; it is H.R. 627. The core of my legislation matches perfectly with the newly implemented regulation, but gives it the force of law and speeds up the effective date.

In a few areas, we are able to improve on the legislation by giving consumers more protections, such as banning cards to people under the age of 18 and allowing consumers to set hard caps on their credit limit to prevent them from going over the limit.

Credit card companies have argued that now is exactly the wrong time to impose more rules on them and that consumers will actually suffer as a result, with less available credit and higher interest rates. Do you think there could be unintended consequences of regulating the credit card industry?

It seems like almost every day we see a story about responsible, good consumers, people who have always paid their bill on time and have never gone over their limit, getting hit with higher interest rates on their existing balance.

These are the same consumers who have seen hundreds of billions of their taxpaying dollars going to the same banks issuing these cards.

I would argue that these are the exact times we need to be protecting consumers.

Whenever you have the Federal Reserve coming out and labeling practices unfair, deceptive and anticompetitive, you know that it is time to act and protect consumers from these practices.

Another important consumer cause you’ve championed is that of overdraft protection. As anyone who’s unwittingly racked up $100 or more in fees due to overdraft protection knows, overdraft protection is a very dangerous and expensive form of credit. What are some of the more egregious aspects of bank overdraft protection programs targeted by the Consumer Overdraft Protection Fair Practices Act?

One of my biggest concerns is that consumers too often are saddled with large overdraft fees without ever knowing that they have been enrolled in an overdraft program and sometimes without the ability to opt out.

My legislation on overdraft fees will give consumers the notice and choice they need to make informed decisions about the fees they are likely to incur on their banking transactions.

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