House Dems tighten credit card fee limits

Perceiving that the era of big deregulation is over, House Democrats Tuesday passed legislation setting tighter limits on the fees and interest rates charged to credit card holders.

“For too long, the credit card industry has faced too few regulations and too little oversight,” said House Speaker Nancy Pelosi (D-Calif.). “It is time to make sure that the market works for the American people with common-sense regulations of the financial services industries.”

{mosads}The bill would order banks to give 45 days notice before a rate hike, and prohibit card companies from raising rates when a consumer has missed a payment on another card.

The bill, dubbed the “Credit Card Holder’s Bill of Rights” passed 312-112, with 84 Republicans supporting the measure sponsored by Rep. Carolyn Maloney (D-N.Y.), chairwoman of the House Financial Services Subcommittee on Institutions. It survived a Republican motion to recommit that got 9 Democratic votes.

President Bush isn’t jumping on the regulatory bandwagon. The administration has formally opposed the bill, saying the problems it’s seeking to fix are better handled through regulations the Federal Reserve is to finalize in December. The administration, in a formal statement, has also said provisions would hamper card issuer’s flexibility in pricing their risk.

“For the credit market to operate efficiently, creditors must have the flexibility to react to changes in customer risk and market conditions,” the statement said.

But the statement made no suggestion that Bush would veto the bill.