Last week, to the delight of consumer advocates nationwide, the House of Representatives passed H.R. 627, otherwise known as the Credit Card Holders’ Bill of Rights Act, by a 357-70 margin. The bill would prevent credit card companies from raising interest rates on existing balances, allow consumers to pay off loans with higher interest rates first, and eradicate unfair late fees and the repugnant practice of “universal default."  It was billed as the first major bill opposed by the credit card companies that has ever won congressional approval.

But while countless media reports have suggested that the victory signals Congress is ready to support working people and buck the financial services industry, the devil is in the details. H.R. 627 -- thanks to an amendment pushed through by Rep. Luis Gutierrez' Subcommittee on Financial Institutions and Consumer Credit -- requires the banks to change their practices 12 months after passage or on July 1, 2010, whichever comes first. The original bill, sponsored by Rep. Carolyn Maloney, forced the banks to implement the changes a mere 90 days after passage. This timeline is crucial because comparable Federal Reserve rule changes will also take effect in July 2010 and the original thrust of the House legislation was to bridge the gap.

In other words, Congressional Republicans and conservative Democrats didn't display newfound backbone by supporting the revised bill; they effectively voted to implement popular reforms already on their way.

Luckily, Sen. Chris Dodd and the Senate Democrats are trying to ramp up the timeline and add more protections to the bill. Mike Lillis at the Washington Independent notes that the Senate version -- which barely passed the banking committee last month -- prevents retroactive rate increases on all existing balances, not just those where a borrower is less than 30 days late on a payment. And Sen. Chuck Schumer is asking the Federal Reserve "to impose an emergency freeze on interest rates of existing credit card balances effective immediately," as the Christian Science Monitor reports.

Not surprisingly, the banking industry is moving with full force to block the measure. In fact, after beating back Dick Durbin's judicial mortgage modification bill -- prompting him to comment that the banks "own" Congress -- they see it as their next big fight on Capitol Hill. American Bankers Association president Edward L. Yingling issued this statement last week:

“The ABA strongly believes that any additional legislative efforts should strive to achieve the right balance between enhancing consumer protection and ensuring that credit remains available to consumers and small businesses at a reasonable cost. We continue to believe that more work needs to be done to achieve that balance.”

Roll Call writes (subscription required) that the industry is already leaning on Sens. Tim Johnson and Tom Carper -- both Democrats hailing from credit card hotbeds. (Johnson voted down the bill in committee.) And Dodd has previously warned that the close committee vote means that the bill might have to be watered down to ensure passage.

There is one key difference between this effort and the mortgage modification battle that took place last week: The Obama administration has gone to the mat on the need for credit card reforms. After meeting with executives in the White House last Wednesday, Obama endorsed the House bill and reiterated his campaign promise to halt the unfair fees. It's unclear whether a White House endorsement can overcome the clout of the bankers, however. The bill could come up for a vote this week. 

Image used under a Creative Commons license by Flickr user pladys.