Politics & Economics: Credit-Card Issuers on the Spot; Democrats to Scrutinize Impact of Fine Print on Middle Class
Washington -- Democrats in congress are bringing the credit-card industry in for fresh scrutiny, renewing a push to protect consumers from lurking fees, interest-rate spikes and other hazards of the fine print.</br></br>Today, Senate Banking Committee Chairman Chris Dodd is to hold a hearing on disclosure, marketing and billing strategies of credit-card firms, the first in a series of hearings on how the industry affects consumers. Meanwhile, a Homeland Security and Governmental Affairs subcommittee headed by Sen. Carl Levin, a Michigan Democrat, has launched a probe into misleading credit-card practices.</br></br>In a study requested by Mr. Levin, the Government Accountability Office recently noted a jump in the number of consumers facing interest rates over 25%, big increases in average fees charged for late payments or exceeding a limit and inconsistencies in how credit- card companies disclose fees to consumers.</br></br>The flurry of activity marks a shift for the credit-card industry, which generally enjoyed favorable treatment on Capitol Hill under Republican rule. As recently as two years ago, Congress was more focused on the effect delinquent borrowers had on lenders, and it passed a landmark law making it harder for borrowers to erase debts by filing for bankruptcy. Banks cheered, and consumer advocates fumed.</br></br>With Democrats now in control of the agenda, the microscope is being focused on how terms offered by banks and credit-card networks burden many consumers. At the least, congressional scrutiny likely will encourage some issuers to move away from practices Mr. Dodd says "trap consumers in a hole of debt from which they may never recover."