Yesterday we noted
that Illinois' own Melissa Bean appears poised to introduce an
amendment that would assist the banking industry by taking the teeth
out of the proposed Consumer Financial Protection Agency (CPFA). As the
lead negotiator for the New Democrats on the House Financial Services
Committee, Bean is attempting to preempt states' authority to set and
enforce stricter protections against the risky financial products that
have made the financial services sector billions. That measure could come up
for a committee vote as soon as Thursday. And Illinois Attorney General
Lisa Madigan is already pushing back, telling Bean and her fellow
members of Congress that its time to "put the interests of our
consumers before those of the banks." From a release:
“To truly protect consumers and ensure that the current economic crisis cannot happen again, the proposed federal agency must be able to coordinate enforcement efforts with state and local agencies,” said Madigan. “It is absolutely critical that states be allowed to continue to investigate abusive practices by major players in the financial services industry, regardless of whether these institutions have a state or national charter; and to enforce our state consumer protection laws against all lenders doing business within our borders.” [...]
“Large nationally chartered institutions share significant blame for this economic crisis,” Madigan said. “And yet, it is those same financial institutions that are fighting on Capitol Hill to prevent the passage of any significant reforms. That cannot happen. Therefore, I urge the members of the Illinois Congressional delegation to put the interests of our consumers before those of the banks that led us in part to this financial crisis.”
Madigan's staff at the state's Consumer Protection Division has seen firsthand the hardship that unreasonable lenders have created through sub-prime lending and arbitrary interest rate hikes, exorbitant penalties, and hidden fees. Bean would do well to listen.
Crain's Greg Hinz has more here.
Comments
Brian J. Donovan (not verified) on Sat, 10/17/2009 - 06:07
The average interchange fee in the U.S. is seven times the interchange fee set by Visa and MasterCard in countries throughout the rest of the world. Using 2008 figures, if the interchange fee charged by credit card issuers was decreased (via comprehensive credit card reform legislation) from the current 2.10% to 0.60%, the result would be an annual savings of approximately $34.3 billion for U.S. merchants and consumers. Credit card issuers could retain 0.3% as a processing fee, the remaining 0.3% could be a "tax" used to fund a Natural Disaster Trust Fund (NDTF). In 2008, this would have generated $6.86 billion in funding for a NDTF.
Let's be clear. The interchange fee is a hidden tax, just not a tax subject to political control or for which there is any discernible social benefit. Decreasing, and imposing a transparent tax on, the interchange fee would have the same stimulus effect of a tax break, but without an impact on the federal budget.
The following article discusses how comprehensive, standardized, simplified, and transparent credit card reform legislation may fund a Natural Disaster Trust Fund.
http://www.csnews.com/csnews/images/pdf/creditcardreform.pdf
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