The big credit card reform bill (H.R.627) that was passed by Congress and signed into law last year by President Obama was designed to end absuses and deceptive practices in the consumer credit market. It did not apply to teh business credit card market. However, there's nothing stopping credit card companies from marketing their business cards to individuals. After all, anybody can be a sole proprietorship, and it's up to the card comapnies to decide who qualifies. According to USA Today this is exactly the loophole card companies are using to dodge the new consumer protections:Read Full Article
As expected, Senate Majority Leader Harry Reid [D, NV]has filed for cloture on the financial reform bill, setting up the possibility of a Wednesday vote on ending the debate and forcing an up-or-down vote on passage.
For financial reform advocates, this is mixed news. On the one hand, the bill that Reid is filing cloture on is stronger than what anyone had really expected the Senate to produce. Blanche Lincoln's tough derivatives language is still mostly in tact, strengthening amendments regarding debit fees, ratings agencies and auditing the Fed have been adopted, and every attempt to weaken the bill so far has been beaten back. On the other hand, some of the most important strengthening amendments haven't been voted on yet and may not get voted on if cloture is approved on Wednesday.Read Full Article
Under the financial reform bill that the Senate is currently debating (the Restoring Financial Stability Act of 2010), payday lenders would be subject to new regulations promulgated by the proposed Consumer Financial Protection Bureau to ensure that their services are "fair, transparent, and competitive." Depending on how aggressive the Bureau ends up being, the rules could severely limit the terms under which payday lends could do business.
But while the underlying bill isn't good for the payday loan industry, an amendment being proposed to it from Sen. Kay Hagan [D, NC] could be more damaging. It would ban payday lenders from giving out new loans to customers who have already taken out six payday loans or have been under loan obligations for more than 90 days in the past year.Read Full Article
Some of the most absurd lending and borrowing happens in the payday loan industry. According to the Center for Responsible Lending (.pdf), the average payday loan borrower pays $800 for each $325 they borrow. That's an absolutely absurd interest rate, but according to the New York Times, the senators who are designing financial reform legislation are going to include a special carve-out so the industry can keep on dealing in these abusive loans:Read Full Article
Rep. Louise Slaughter [D, NY-28] recently introduced a bill along with Rep. John Tierney [D, MA-6] that would set a nation-wide annual credit card interest rate cap at 16%. She's bringing the bill straight to the Rules Committee, of which she is the Chair, in an attempt to prevent it from simply dying in committee.Read Full Article