It's Official: The New Credit Card Rules Suck Wind

Back in August I wrote an article for Parade on the perils of credit cards, and I looked ahead to legislation that was moving ahead to enactment, as well as a Federal Reserve rulemaking.

Well, all that has come to pass and it's official: consumers are as prone to abuse by credit card companies, most of them beneficiaries of TARP largesse, as ever before.

Gretchen Morgenson's column in the New York Times today describes how banks are figuring out new ways of rooking customers, and regulators are doing nothing about it. One back is charging for statements, which

certainly seems to flout the spirit of both the Fed’s regulations and the Credit Card Accountability Responsibility and Disclosure Act of 2009. But because it is labeled a statement fee, it does not appear to violate the letter of the law, which barred credit card issuers from levying separate fees when a consumer submitted a payment, whether “by mail, electronic transfer, telephone authorization, or other means, unless such payment involves an expedited service by a service representative of the creditor.”

The Washington Post points out that the new rules don't cover rebate cards.

Expiration dates on those cards typically range from two weeks to three months, said Brian Riley, an analyst with the research firm Tower Group. In addition, the programs are often designed to discourage consumers from redeeming the offer, he said. Riley estimated about 20 percent of $4 billion in annual rebate offers are left on the table.

Here's a laundry list (PDF file) of other methods card issuers have used to circumvent the new credit card rules, compiled by a confederation of consumer groups.

There's a lot that Congress and the Fed are totally neglecting, such as unfair collection methods that include sewer service. I'm glad that the media is focusing on the deficiencies of the credit card legislation, but there needs to be more coverage of the general sleaze involved, and the need to rebuild consumer protection laws.

© 2010 Gary Weiss. All rights reserved.

The Missing Link in Obama's Regulatory Scheme

I've monitored the media coverage carefully over the past couple of days, to see if anyone in the media spotted the obvious, glaring missing link in the Obama administration's financial regulation overhaul scheme (pdf).

Here are some hints as to what Obama left out:

1. It's a major reason for the financial crisis.

2. It's corrupt, hypocritical, and just downright stupid.

3. It continues to have a central role in the regulation of the markets, and few people (including myself) have figured out a way to deal with it---except to point out that it is a missing link, and that it needs to be addressed.

Give up? The missing link in the regulatory overhaul plan is Congress.

It was Congress that cut funding to the SEC and has failed to adequately supervise the agency. It is Congress that sliced to shreds the consumer protections that gave rise to the subprime and mortgage boiler-room fiasco. It was Congress that is financed, in large measure, by campaign contributions from the securities industry.

Sorry for stating the obvious, but you can't do a thing about financial securities regulation without fixing Congress--changing the campaign finance system, kicking out members who are beholden to Wall Street and Corporate America.

A good example of Congress's cluelessness is the grandstanding at the Senate Banking Committee yesterday, when Tim Geithner appeared to defend the Obama plan. The stunning hypocrisy on display yesterday was galling:

Banking Chairman Christopher Dodd (D., Conn.) used the hearing to warn financial firms not to oppose the creation of a financial-product safety agency aimed at protecting consumers. "The very people who created the damn mess are the ones now arguing that consumers ought not be protected," Mr. Dodd said.

Congress is behaving as if it was not a major participant in the regulatory mess that caused the financial crisis, and the media is letting 'em getting away with it.

© 2009 Gary Weiss. All rights reserved.