By: Gerri L. Elder
The Federal Reserve Board is taking a stand for consumers and pushing to end "unfair and deceptive" practices in the credit card industry against consumers who are already strapped for cash and struggling with the poor economy in the United States.
The Fed has proposed reigning in credit card companies and protecting consumers who owe from companies that arbitrarily raise interest rates or don't give borrowers adequate time to pay their bills. If approved, the new regulations will be the harshest slap down the credit card industry has been subjected to in decades and many people say it is about time.
Federal Reserve Chairman Ben Bernanke said that the proposed new regulations for the credit card industry aim to set a new baseline standard for fairness to consumers. With many more Americans reduced to relying on credit cards just to get by and obtain necessary items, it is essential that their credit card rates and payments remain predictable.
Of course the banking industry is not willing to roll over and play dead and let the new regulations be imposed on them. Banking officials say that the new regulations proposed by the fed will hurt consumers and are an unprecedented regulatory intrusion into marketplace pricing and product offerings.
According to an Associated Press report, president and chief executive of the American Banking Association Edward Yingling says that the proposed regulations would eliminate competition among banks and would drive consumer costs up while reducing credit choices and access to credit cards.
The Fed says that the proposed regulations are designed to protect consumers. After being criticized for not acting quickly enough to prevent the nationwide foreclosure crisis, the board is now taking preemptive precautions in regard to credit card debt.
Under the proposed new rules:
The Fed says that the new regulations may be finalized by January 1, 2009. Democrats in Congress praise the proposed regulations but fear that the changes will not come soon enough to help the millions of low income and middle class borrowers that critics say have been taken advantage of by the credit card industry and are feeling the weight of crushing consumer debt and edging toward bankruptcy.