Why Did The Senate Fail to Expedite Much Needed Relief on Credit Card Reform?

The economic crisis unveiled the debauchery of the financial industry in the United States and should have provided sufficient evidence that making money always trumps any level of social responsibility in the financial world.  Given this, it should have been evident to Congress that passing the CARD Act of 2009  (Full title of the Act is the Credit Card Accountability Responsibility and Disclosure Act of 2009, H.R. 627) which was signed by the President on May 22, 2009, and not making it effective until nine months in the future, would have created a frenzy among the credit card companies to get away with as much as they could before the law became effective.  Why this was not anticipated is beyond reason.

On November 4, 2009, in response to continued and increased iniquity by the credit card companies, the House voted to expedite the Act’s effective date to December 1, 2009 (S. 1833: Expedited CARD Reform for Consumers Act of 2009). Unfortunately, the Senate stalled such expedition and activity on the proposed amendment stopped at the Senate committee level in October (the last activity in the Senate was on October 24, 2009).  Granted the House has the luxury of a more expeditious process than the Senate, but when the proposed effective date is December 1, 2009 the proposal should have been prioritized by the Senate to move things along expeditiously (as was the intent; to expedite).


The Act is intended to protect U.S credit card holders by “ending the days of unfair rate hikes and hidden fees.” The White House Press Secretary released a fact sheet of the Act which restricts credit card company practices in the following ways:

• it restricts interest rate increases during the first year
• It prevents interest rate increases on existing balances except for three instances
• Longer amounts of notice are required in order to raise rates on future purchases
• Keeps payment terms the same... meaning credit card companies can't change the terms on you
• Places limits on the fees and penalty interests that companies can charge consumers
• Companies must consider the consumer's ability to pay before allowing limit increases or issuing a new card
• Requiring companies to set reasonable due dates
• Preventing companies from targeting young consumers
• Stopping deceptive advertising for credit reports
• Setting Gift Card Protection 

While these protections are a breath of fresh air for anyone who is trying to dig their way out of debt for one reason or another, the wait is as excruciating as waiting for a rescue team to dig you out of an avalanche.   As the months have passed, credit card companies have continued to suffocate consumers by reducing credit limits to the current balance of the card forcing the cards to go over their limits once the interest is added, thereby generating an over the limit fee, they have increased interest rates to 29.99%, they have increased minimum monthly payments requirements, and the list goes on.

Now, many will argue that these measures could have been avoided if individuals had managed their money more responsibly; I agree and disagree. There are those who could have avoided falling prey to the credit card companies by planning better or spending less. But, there are also those who are unemployed, some have been for over a year.  So, when there is no income, other than unemployment insurance, which is not enough for most people to live on, people have no choice but to cozy up to grocery shopping, fueling their cars, paying medical bills, and buying clothes for their children with those credit cards that have been so generous in the past.  They knew what the terms were; they knew what to expect.  That was until the Act was passed with a nine-month leeway giving the credit card companies one last chance to scramble before they were permanently restricted from making their own rules like they were living in the wild west. 

The birth of this abuse occurred in 1978 when the Supreme Court in Marquette vs. First Omaha Service Corp., ruled that a national bank could charge the highest interest rate allowed in their home state to customers living anywhere in the United States, including states with restrictive interest caps.  As a result, Citibank moved to South Dakota. Why? Because they have no usury limits on credit cards (See SL 1982, ch 341, § 1; SL 1987, ch 360, § 4; SL 1994, ch 351, § 147).  The other credit card companies began to catch on and do the same. Other states, in order to compete for the credit card companies’ business, relaxed their usury laws without regard to the possible implications on the citizens of their states.

It is nice (and I use this word intentionally) that after the federal government, the Supreme Court of the United States, the state legislatures, and the credit card companies with total disregard for the consumer, collectively ensured that the credit card companies would make money, that they now cannot find it in their schedules to expedite the halting of this abuse thereby creating some relief in an otherwise dismal economy.

My thoughts are that in the midst of an economic crisis that is borderline comparable to the Great Depression, it is appalling to me that a law was passed in response to the credit card companies’ abuses, and the credit card companies rather than have some decorum of social responsibility by reflecting on their behavior, have actually become even more disgusting and avaricious in their practices. I am also gravely disappointed that the Senate did not take the time to look up the definition of  “expedite” so that they could have provided some much needed relief to its constituents.  During these tough economic times I would have hoped the credit card companies would have worked with customers, and not taken further advantage of them and if not, that the Senate would have found the time to force them to.  It's not fair, and that's not good business practice from either.

The questions I would like to leave you with is: How could the credit card companies have given such an overwhelming amount of credit to consumers, changed the rules midstream  and then be so shocked that people can’t afford to pay their bills? Additionally, why could the Senate have not taken the time to stop this and provide some much needed relief? Even the best financial planning could not have prepared many of us for this.