Over the objection of the White House, the House of Representatives on Tuesday overwhelmingly passed legislation to curb what its sponsors regard as abuses and unfair practices in the credit-card industry.
By a vote of 312-112, The Credit Cardholders Bill of Rights Act sailed through the House amid a new political climate of increased regulation and oversight of the credit and finance industry.
However, the legislation faces an unclear future in the Senate, where members are focused on crafting and passing the financial bailout. The White House is seeking quick passage of the Wall Street rescue measure before Congress adjourns on Friday, which would make action on the credit-card legislation unlikely in the near future.
The measure, sponsored by Democratic Reps. Carolyn Maloney of New York and Barney Frank of Massachusetts, would curtail certain practices such as upfront fees on subprime credit cards; interest-rate increases on existing card balances; steering payments to card balances with lower interest rates and charging late fees on payments mailed at least a week before the due date.
Maloney hailed the bill's passage as a much-needed response to consumer suffering in the troubled economy.
“This historic legislation will help working families who face their own credit crunch as a result of what the Federal Reserve itself calls ‘unfair,' ‘deceptive' and ‘anti-competitive' credit-card practices,” Maloney said.
The legislation is similar to many of the recommendations that the Federal Reserve has suggested to clean up abusive practices in the credit-card industry.
Those proposals, which have sparked a record number of public comments, are expected to be finalized in December.
House Republicans have cited the pending regulatory actions as a main reason for opposing the legislation.
In a statement, the White House said the bill also would make credit more expensive for some borrowers and harder to get for others because it would hamper card issuers' ability to set prices based on borrower risk. Some of the nation's largest credit-card companies expressed similar concerns.
“We are very concerned that this bill would significantly hinder our ability to price the risks of lending and would result in less credit being made available to credit-worthy borrowers at the worst possible time, with generally higher prices for those who do receive credit,” said Betty Reiss, a spokeswoman for Charlotte-based Bank of America.