H.R. 627 modified the Truth in Lending Act provisions relating to credit cards. H.R. 627, among other things, gave credit card holders additional rights and protections, and limited the conditions under which credit card issuers could raise interest rates.
This was a vote on an amendment offered by Rep. Maloney (D-NY) that required credit card holders to affirmatively agree to receive over-the-limit protection on their credit card in order for a credit card company to charge an over-the-limit fee. Additionally, the amendment would allow for transactions that go over the limit to be completed for operational reasons as long as they are of a small amount, without the credit card company being allowed to charge a fee.
Rep. Maloney (D-NY) began her statement in support of the amendment by claiming: “(F)or far too long, credit cardholders have been alone in the fight to bring reasonable standards back to credit card practices. With the passage of this amendment and the underlying bill . . . consumers will be treated more fairly by credit card issuers and will be better able to manage their accounts. “She noted that President Obama had recently told card company executives “that credit cards had become unnecessarily complicated for consumers, often leading them to pay more than they reasonably expect.”
Maloney went on to argue: “(O)ur constituents are faced with a multitude of fees and penalties that can be assessed to their credit card accounts. In many cases they do not even know the fees exist because disclosure agreements can be confusing and hard to understand. She cited a recent editorial in the New York Times, which “detailed one of the so-called ‘worst tricks’ used by credit card companies, ‘allowing a consumer to overcharge on his or her account but when the bill arrives, the consumer has been assessed an over-the-limit fee.’ ”'
Rep. Neugebauer (R-TX) opposed the amendment because he said it would take “choices away from the people that use credit cards . . . .” He went on to say that the credit card system “is really not broken,” and cited a Federal Reserve study that examined the over-the limit issue and “decided to leave it alone, found out it was working extremely well.” Neugebauer also opposed the amendment because he characterized it as “micromanaging this process. And the big losers are going to be the consumers that rely on that very valuable service.”
Rep. Hensarling (R-TX) opposed the amendment because it took away what he suggested was the ability of consumers to make choices, which he said strengthens the competitive market. Hensarling claimed that “consumers overwhelmingly want this (over-the-limit) option . . .” and that a better solution would be “informed consumers, with effective disclosure.” He urged Congress to “quit protecting consumers from their choices. Quit protecting them from competition. You are making their lot worse, not better, when you do this.”
The amendment was approved by a vote of 284-133. Two hundred and forty-one Democrats and forty-three Republicans voted ‘aye”. One hundred and seventeen Republicans and sixteen Democrats voted “nay”. As a result, the House added language, requiring that credit card holders explicitly agree to receive and be charged for over-the-limit protection, to the bill it was considering that amended the Truth in Lending Act.