(H.R. 3639): A bill to move up the effective date for certain new consumer protections for credit card holders - - on the motion to add language that would have required that the new protections be effective on February 22, 2010 unless the Federal Reserve System certified that credit card companies could implement them by December 1, 2009, the effective date of the bill
Earlier in 2009, Congress passed and President Obama signed legislation requiring several new credit card rules. Those rules were designed to have credit card issuers end what were considered unfair practices, and to protect consumers against further large increases in rates and “hidden” charges. Under the terms of that legislation, most of those new rules were scheduled to take effect on February 22, 2010.
Many in Congress subsequently expressed concern that some credit card companies had raised interest rates and decreased credit limits on many consumers in advance of the effective date of the changes. In response, H.R. 3639 was developed. This bill moved the effective date of certain of the new provisions established in the previously-enacted legislation from dates in 2010 to December 1, 2009. This was a vote on a motion by Rep. Castle (R-DEL) to send the bill back to committee and have language added that would have required that most of those new protections be effective on February 22, 2010, unless the Federal Reserve System certified that credit card companies could implement them by December 1, 2009, the effective date of the bill.
Rep. Castle represents a district in Delaware, in which a number of major credit card companies are located. He noted that they “have a lot of work to do to implement (these regulations and) . . . I don't know if they are ready to do this by the date of December 1 or not.” He noted that the proposed language would not change any of the new regulations, but “just speaks to the date of all this going into place.” Castle argued: “(T)here is a certain fairness issue in this . . . .” He also argued “that the Federal Reserve is the best (judge) to do that.”
Castle referenced previous testimony by the Federal Reserve’s Director of Consumer Affairs that, as a result of the new rules, “card issuers would need to rethink their entire business models to reprogram their systems and redesign their marketing materials, solicitations, periodic statements, and contracts.” He added: “(I)t's all well and good for us to stand here as Members of Congress and say we'll make this change that would benefit consumers or whatever, but it may not be practical. . . Indeed, if the Federal Reserve makes a decision . . . that it could be done by December 1, we'll move ahead in that time. . . It doesn't alter the fact that we are going to have this change. It just takes this date and allows it to be reviewed by people who have some expertise to determine if they should move forward at this point or not.”
Rep. Frank (D-MA), who chairs the Financial Services Committee, opposed the motion. He first noted that the language proposed by Rep. Castle “empowers the Federal Reserve to cancel an act of Congress” and effectively says “if the bill passes the House and passes the Senate and is signed by the President, we will then wait for the permission of the Federal Reserve Board of Governors to implement it . . . .” Frank also argued that Congress “should certainly never set the precedent that any agency . . . should be given the power to suspend an act of Congress before it goes into effect . . . I have a lot of respect for the Federal Reserve, but they're not in charge of what we think is feasible. They're not in charge of telling us that we have to wait more for public comments when our constituents, we believe, are being mistreated.”
The motion was defeated by a vote of 171-253. One hundred and sixty-eight Republicans and three Democrats voted “aye”. Two hundred and forty-seven Democrats and six Republicans voted “nay”. As a result, no language was added to H.R. 3639 that would have delayed the implementation of new consumer protections for credit card holders.