Earlier in 2009, Congress passed and President Obama signed legislation requiring several new credit card rules. Those rules were designed to have credit card issuers end what were considered unfair practices, and to protect consumers against further large increases in rates and “hidden” charges. Under the terms of that legislation, most of those new rules were scheduled to take effect between February and August of 2010.
Many in Congress subsequently expressed concern that some credit card companies had raised interest rates and decreased credit limits on many consumers in advance of the effective dates of the changes. In response, H.R. 3639 was developed. This bill moved the effective dates of certain of the new provisions established in the previously-enacted legislation from dates in 2010 to December 1, 2009. This was a vote on an amendment offered by Rep Sutton (D-OH) to impose additional restrictions on credit card issuers. Those additional restrictions included the imposition of a nine month moratorium on increases in annual percentage rates, fees and finance charges on credit cards, and on changes in the terms of balance repayments.
Speaking in support of her amendment, Rep. Sutton first referred to the previously-passed legislation. Sutton argued that: “Rather than preparing to implement these new consumer protections, the credit card industry saw this as a window of opportunity to squeeze more money out of consumers. They are raising interest rates and minimum payments while lowering credit limits. They are instituting fees of all shapes and sizes.”
She then claimed that her amendment “tackles the dilemma faced by consumers who receive notice of new fees on their credit card accounts. As credit card companies search for new ways to make money, they are looking to charge fees where there were none before: new annual fees, inactivity fees, fees for failure to carry a monthly balance. Yes, now some credit card companies are indicating they will be charging a fee to consumers who pay off their balances every month . . . I find it outrageous, but the credit card companies argue that if the consumers don't like it, they can close their account . . . The problem is that closing your account can hurt your credit score, and credit scores . . . are used by mortgage lenders, employers, landlords and insurance providers. This amendment is about leveling the playing field.”
Sutton went on to say: “(T)his amendment protects consumers by preventing the closure of a credit card account because of new fees from negatively impacting a consumer's credit report or credit score. It will allow consumers to cancel their card or shop around for another card with terms without taking a hit on their credit.”
Rep. Maloney (D-NY), who was the sponsor of H.R. 3639, supported the amendment. She argued that it “gives more responsibility and control to consumers to better manage their own credit. Credit scores should not go down if consumers are trying to do the right thing by getting out of debt . . . This is absolutely wrong when they are . . . trying to . . . better control their own finances, to stop unfair fees and unfair interest rates retroactively on their balances.”
The Republican minority had opposed the previously-passed legislation, was opposing H.R. 3639, and also opposed the Sutton amendment to it. Rep. Hensarling (R-TX) was among those leading that opposition. He argued that Members of Congress “are not experts on what constitutes a greater or lesser credit risk, and . . . why do we want to start dictating to credit bureaus about what constitutes a greater risk and what constitutes a lesser risk.” He also said that, although the “amendment strikes me as fair . . . I don't believe Congress has expertise in this.”
The amendment passed by a vote of 249-173. Two hundred and twenty-eight Democrats and twenty-one Republicans voted “aye”. One hundred and fifty-three Republicans and twenty Democrats voted “nay”. As a result, language was added to H.R. 3639 that imposed a nine month moratorium on increases in annual percentage rates, fees and finance charges on credit cards, and on changes in the terms of balance repayments.