Home > Personal Finance > The Elephants in the Room: The GOP’s War on Consumer Protection

Comments 0 Comments

Saturday, June 25th, represents a seminal day for Bank of America credit card holders. It is Penalty Rate Increase Day. From that day forward, the penalty rate for card holders who pay their bill as little as one day late could rise to 29.99% on all future purchases. This is in addition to a late fee of up to $25 for the first time and $35 if there is a second slip within six months. Talk about a day late and a whole lot of dollars short……..

After the tumultuous past few years of the Great Recession when banks and credit card companies slashed and burned millions of cardholders by closing accounts, lowering credit limits, raising interest rates and fees to unconscionable levels, virtually without warning, this may feel like same s#%t, different day, but not this time.

The good news, if it can be considered good news, is that Bank of America’s announcement, while not welcome, was made pursuant to new, more transparent procedures mandated by the Credit Card Accountability Responsibility and Disclosure (CARD) Act.

While Bank of America cardholders might not like what they read, it wasn’t done in the same flash flood fashion of yesteryear where an unexpected notice could instantly cause an economic sea change that swamped their finances and threatened to sink their credit. Now there is a 45-day notice period; the increase doesn’t impact existing balances; and cardholders have the right to opt out of the relationship with some five years to pay off existing balances. That’s enough time to find another credit card or to negotiate with their other credit card companies to increase credit lines on existing accounts to make up the shortfall that will be caused by terminating their relationship with Bank of America.

[Article: A Subprime Pioneer’s Notes on the Financial Crisis She Predicted]

Greater transparency, clarity and fairness in financial procedures and disclosures represent a genuine step toward raising the level of financial literacy in our nation. It begins to level the playing field in what has been a very unbalanced adhesive relationship. Though the new rules are not the silver bullet and definitely are a work in progress, this is how you eat an elephant—one bite at a time.

Why Another Regulatory Agency?

The CARD Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act were designed to address the imbalances and excesses of the past decade, and as I’ve argued before, the centerpiece of Dodd-Frank is the Consumer Financial Protection Bureau.

You might be saying to yourself, “OK, so even if I buy into the CARD Act, why do we need a new regulatory agency? Isn’t that more money and greater bureaucracy at a time when we need to be cutting the budget and reducing government?” That is the position of the US Chamber of Commerce, the financial services industry and the GOP.

The reality is that, historically, federal regulatory authority in the financial services area has been dispersed among so many agencies with so many conflicting jurisdictions, fragmentation, decentralization and a lack of focus—all of which fostered a laissez-faire approach to oversight and enforcement. Put simply, until recently, the U.S. didn’t have a regulator whose sole job was to protect consumers from financial predators. That’s ultimately why the CARD Act and Dodd-Frank were necessary—because there were so many players with varying mandates, no one was paying attention.

For some GOP pro-business members of Congress, like House Financial Services Chairman Spencer Bachus, that wasn’t such a bad thing: “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

[Resource: Get your free Credit Report Card]

Enter the CFPB »

Image: Stuart Bassil, via Flickr.com

Pages: 1 2

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team