May 14, 2009 / 7:39 PM / 9 years ago

Credit card reform bill slows in U.S. Senate

WASHINGTON, May 14 (Reuters) - A credit card reform bill that would ban arbitrary interest rate hikes remained stalled in the Senate on Thursday as Democratic and Republican leaders negotiated amendments to be offered by lawmakers.

“I hope that we can pass it before we leave next Friday for our recess,” Senate Democratic Leader Harry Reid told reporters.

Congress is scheduled to work next week, then take a one-week break to observe the U.S. Memorial Day holiday.

The U.S. House of Representatives approved its own version of credit card reforms on April 30. But the Senate’s debate has been slowed by lawmakers’ amendments to the bill, including one that would allow retailers and restaurants to give customers a discount if they paid by cash, check or debit card.

On Thursday, Senate leaders from both political parties sought to work out which amendments would be offered, according to a Senate aide. If they reached agreement, the Senate could hold a procedural vote later in the day, the aide said. Otherwise, action would be delayed until next week.

The legislation is being closely monitored by Citigroup Inc (C.N), Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N) and Capital One Financial Corp (COF.N). The four big banks held almost 77 percent of the U.S. credit card market at the end of 2007.

Bank industry groups have argued that excessive regulations could cut deeply into credit card companies’ revenues and limit their ability to price for risk -- forcing them to raise some customers’ interest rates and cut credit lines.

The Senate bill, authored by Christopher Dodd of Connecticut, would prohibit card issuers from boosting interest rates in the first year after a credit card account is opened and require promotional rates to last at least six months. It would also require credit card statements to be mailed 21 days before a bill is due rather than the current 14.

Another provision would require cardholders to get 45 days’ notice of any interest rate, fee and finance charge increases.

President Barack Obama urged Congress to pass a final credit card reform bill by the end of May.

    “Enough is enough. It’s time for strong, reliable protections for our consumers,” Obama told a New Mexico audience. “You should not have to worry that when you sign up for a credit card, you’re signing away all your rights. You shouldn’t need a magnifying glass or a law degree to read the fine print.”

    The legislative efforts mainly codify rules that the Federal Reserve and other banking regulators adopted last year but that do not go into effect until July 2010. Some lawmakers and consumer groups say Americans need relief sooner.

    A final bill would also mark the first in a series of measures seeking to reshape U.S. financial services and market oversight, which many Democrats blame for contributing to the current financial crisis.


    * FACTBOX-Five facts about credit card use [ID:nN14497166]

    * FACTBOX-Details of credit card bill [ID:nN22263204] (Additional reporting by Donna Smith, Jeff Mason and David Alexander, editing by Gerald E. McCormick)

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