Credit card reforms needed: Shelby

By John Poirier

WASHINGTON (Reuters) - The credit card industry is in need of reform but a U.S. Senate bill aimed at changing industry practices will not pass in its current form, senior Republican Senator Richard Shelby said on Friday.

Speaking at the Reuters Global Financial Regulation Summit in Washington, Shelby said he would like the bill changed to allow credit card companies to adjust interest rates to reflect the credit risk posed by individual customers.

"I think some of the stuff in the bill is very good," said the top Republican on the Senate Banking Committee when asked if he opposed the current version of the bill.

"The bill won't go anywhere as it is" he added. "We're trying to work to improve it."

Lawmakers have complained that the same banks with big credit card operations have been employing deceptive practices at a time when they have received large amounts of bailout funds from credit card-using taxpayers.

Last month the banking committee narrowly backed the legislation that would severely restrict interest rate increases on credit card holders.

Banks have complained that legislation, if enacted into law, could reduce the availability of credit and also make it more expensive for consumers to use credit cards.

Frustration with credit card practices that surprise users with hiked rates, charges and fees is widespread among Americans.