Credit Card Acceleration Bill Passes House Panel

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, Oct. 22, 2009.

Legislation that would bring forward the implementation date of credit card legislation to Dec. 1, 2009, from the original date of February 2010, cleared the House Financial Services Committee October 22.

Proponents of the bill argue that some credit card companies have raised rates and fees in anticipation of the new rules.

H.R. 3639, the Expedited CARD Reform for Consumers Act of 2009, would maintain the original implementation date for issuers with fewer than 2 million cards in circulation, which accounts for about 10 percent of the market. The bill also would eliminate the accelerated date for gift card issuers.

Strain

The American Bankers Association said it would be “extremely difficult, if not impossible,” for banks to meet the new deadline. “Moving up the implementation date will place additional strain on institutions and is likely to further restrict access to credit at a time when consumers, small businesses and the broader economy need it the most,” said ABA President and general counsel Kenneth Clayton.

Bernanke Questions Moving Implementation Date

Federal Reserve Board Chairman Ben Bernanke said moving the implementation date of the Credit Card Accountability Responsibility and Disclosure Act forward could benefit consumers but could also result in “unintended consequences” due to inadequate public comment period.

In a letter to House Financial Services Committee Ranking Member Rep. Spencer Bachus, R-Ala., Bernanke wrote that the Fed expects the comment period for its proposed implementing regulations to end on November 20. Moving the bill’s implementation date to December 1 will mean that the board will have to issue final regulations without waiting for comments, Bernanke said.

“Although a December 1 effective date could provide benefits for consumers, the Board continues to believe that, given the breadth of the changes required by the Credit CARD Act and its regulations, card issuers must be afforded sufficient time for implementation to allow for an orderly transition and to avoid unintended consequences, compliance difficulties, and potential liabilities,” Bernanke wrote.

The chairman also noted that the amount of time necessary to comply with the legislation may vary by creditor and by provision. Many small institutions such as community banks and credit unions rely heavily on third-party vendors to adjust their systems, and these vendors are currently overwhelmed by demand, according to Bernanke.

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