NEW YORK (CNNMoney.com) — The Federal Reserve on Friday pushed ahead with a proposal to stop abuses by credit card issuers, a day after two other key bank regulatory agencies proposed effectively the same package of new rules.
The move comes at a time when the $2 trillion industry has come under increasing scrutiny.
“The proposed rules are intended to establish a new baseline for fairness in how credit card plans operate,” said Ben Bernanke, chairman of the Federal Reserve, which regulates many U.S. banks. “Consumers relying on credit cards should be better able to predict how their decisions and actions will affect their costs.”
Among other things, the plan would allow consumers more time to pay monthly bills. It would also prevent companies from applying interest-rate increases retroactively to pre-existing balances. And it would ban “double cycle billing,” a practice that computes finance charges based on previous billing cycles.
A top financial services lobbyist blasted the plan.
“The Federal Reserve’s proposal is an unprecedented regulatory intrusion into marketplace pricing and product offerings,” said Edward Yingling, chief executive of the American Bankers Association.
On Thursday, the Office of Thrift Supervision, responsible for overseeing the nation’s savings and loans, and the National Credit Union Administration, approved proposed rules the Fed “substantively similar.”
The reforms will be subject to public comment for 75 days. The agencies expect to finalize any new regulatory changes by the end of the year. … continue reading this entry.
