Fed Chairman Opposes Change in Effective Date of Credit Card Law

Federal Reserve Chairman Ben S. Bernanke said Wednesday that moving up the effective date of a new credit card law could benefit consumers but would strain small credit providers and cause other problems.
The House Financial Services Committee is expected to take up legislation this week or next to move up to Dec. 1, from late February next year, implementation of a law enacted in May to curb abusive credit card billing practices.
In response to a query from Rep. Spencer Bachus of Alabama, the committee’s ranking Republican, Bernanke said, “Moving the act’s effective date to December 1, 2009, could benefit consumers by providing important protections earlier than scheduled (including protections against applying increased rates to existing credit card balances).”
The financial services industry strongly opposes moving up the effective date, saying such a move would throw the credit card industry into disarray.
The drive to accelerate implementation of the new regulations came in response to a rush by some card issuers to raise minimum payments and pull back credit offerings in anticipation of the new law. Research from the Pew Charitable Trust found interest rates have risen by an average of 20 percent on credit cards representing more than 91 percent of the $864 billion in outstanding card balances.