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H.R. 3639 (111th): Expedited CARD Reform for Consumers Act of 2009
- Introduced:
- Sep 24, 2009 (111th Congress, 2009–2010)
- Sponsor:
- Rep. Carolyn Maloney [D-NY14]
- Status:
- Died (Passed House)
The bill’s title was written by the bill’s sponsor. H.R. stands for House of Representatives bill.
Library of Congress Summary
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.
11/4/2009.
Section
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Amends the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act of 2009) to: (1) make Title I: Consumer Protection, Title II: Enhanced Consumer Disclosures, and Title III: Protection of Young Consumers effective as of the date of enactment of this Act; and (2) make February 22, 2010, the effective date of such titles for a depository institution with fewer than two million credit cards in circulation on the date of the enactment of the Credit CARD Act of 2009.
Section
3
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Amends the Truth in Lending Act (TILA) to make conforming amendments with respect to review of past consumer interest rate increases.
Amends TILA to move to the date of enactment of this Act:
(1) the deadline by which the Board of Governors of the Federal Reserve System (Board) must issue final implementing rules for required creditor reviews of changes in factors considered in past consumer annual percentage interest rate (APR) increases when determining whether to reduce the APR; and
(2) the effective date of the creditor review requirement.
But makes February 22, 2010, the rules deadline, and August 22, 2010, the effective date of the creditor review requirement governing a depository institution that has fewer than two million credit cards in circulation on the date of the enactment of this Act. Declares the date of enactment of this Act:
(1) the effective date of the requirement that any penalty fee or charge that a credit card issuer may impose, including a late payment fee, over-the-limit fee, or any other penalty fee or charge, be reasonable and proportional to the omission or violation to which it relates; and
(2) the deadline for the Board to issue final implementing rules establishing standards for assessing whether any such penalty fee or charge is reasonable and proportional.
But makes February 22, 2010, the rules deadline, and August 22, 2010, the effective date of the reasonable and proportional requirement itself, with respect to a depository institution with fewer than two million credit cards in circulation on the date of the enactment of this Act.
Section
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States that TILA does not prevent a creditor from putting into effect immediately: (1) any reduction in APR; (2) elimination or reduction of any fee imposed on a consumer; or (3) any significant change in terms for the benefit of the consumer.
Section
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Defers until February 22, 2010, the effective date of the new requirement under the Act that a credit card issuer must apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest.
Conditions this moratorium, however, on the creditor's refraining from:
(1) increasing any APR, or fees or finance charges applicable to any existing or future balance (other than as provided in TILA); or
(2) changing the account terms to the detriment of a consumer, including repayment of any outstanding balance (other than as provided in TILA).
Section
6
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Amends TILA to prohibit either a creditor or a consumer reporting agency from using the pay off or closure of a consumer credit card account under an open end consumer credit plan to negatively impact the consumer's credit score or consumer report when the consumer pays off an outstanding account balance within 45 days after receiving notice of the imposition of a new fee.
Section
7
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Imposes a limited moratorium on APR, fee, and finance charge increases, beginning on the date of enactment of this Act. Prohibits a creditor, during the moratorium period, from:
(1) increasing any APR, fee, or finance charge applicable to any outstanding balance of a credit card account under an open end consumer credit plan; or
(2) changing the repayment terms of an outstanding balance (except as permitted under TILA). Ends such moratorium nine months (February 22, 2010) after the date of enactment of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (May 22, 2009).
House Republican Conference Summary
The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.
This summary can be found at http://www.gop.gov/bill/111/1/hr3639.
Background
Some members may be concerned that since the Credit CARD Act was signed into law on May 22, 2009, consumers, including many small businesses, have experienced a dramatic decrease in the availability of credit. Seventy-nine percent of small businesses surveyed by the Small Business Administration said that credit card lending has tightened since last year. Small business lending is down almost $118 billion since the fourth quarter of 2008 and 10 percent of all credit-card lines have been cancelled outright.
Federal Reserve Chairman Ben Bernanke expressed his concerns regarding the harmful impact of H.R. 3639. In an October 9, 2009 letter to Rep. Spencer Bachus (R-AL), Chairman Bernanke stated,
"Creditors must make extensive changes to their systems and business models in order to comply with the Credit CARD Act...Creditors must also revise underwriting systems for all new and existing credit card accounts, develop new systems for calculating interest charges when balances are partially paid during a grace period, create procedures for submitting credit card agreements for publication on the Board's website, and design new disclosures regarding the consequences of making minimum payments."
"Board staff understands that many small institutions (such as community banks and credit unions) rely heavily on third-party vendors to adjust their systems and that these vendors are currently overwhelmed by the demand from all of the institutions they service."
"Board staff also notes that creditors are not the only entities that must comply with the Credit CARD Act. In particular, the Act requires institutions of higher education to disclose agreements with credit card issuers regarding the marketing of credit cards to student. Many of these institutions may be unaware of the new requirement and will require some time to put procedures in place to make these agreements available."
Summary
H.R. 3639 would accelerate the implementation dates of the Credit Card Accountability Responsibility and Disclosure Act of 2009, moving the nine-month (February 20, 2010) and 15-month (August 22, 2010) implementation dates up to December 1, 2009. The February rulemaking addresses the majority of the provisions in the Credit CARD Act, including the limitations on rate increases for existing balances, the requirement that creditors consider a consumer's ability to make the required payment before opening a credit card account or increasing a credit limit, the provisions addressing extensions of credits to consumers who are under 21, the limitations on the assessment of fees for exceeding the credit limit, the requirement that payments above the minimum generally be allocated first to that balance with the highest rate, and the prohibitions on double-cycle billing and on charging interest on amount paid prior to the expiration of the grace period. The August provisions address fees and disclosures for gift cards and other prepaid cards, the amount of credit card penalty fees, and the requirement that creditors re-evaluate past credit card rate increases every six months.
Cost
The Congressional Budget Office (CBO) estimates that enacting this bill would have no significant effect on revenues or net direct spending. H.R. 3639 would impose private-sector mandates. The CBO estimates that the aggregate cost of those mandates would probably exceed the annual threshold established in UMRA for private-sector mandates ($139 million in 2009, adjusted annually for inflation).
House Democratic Caucus Summary
The House Democratic Caucus does not provide summaries of bills.
So, yes, we display the House Republican Conference’s summaries when available even if we do not have a Democratic summary available. That’s because we feel it is better to give you as much information as possible, even if we cannot provide every viewpoint.
We’ll be looking for a source of summaries from the other side in the meanwhile.
The bill contains the following citations to other parts of U.S. law:
Slip Laws
Slip laws refer to enacted bills and joint resolutions in their original form as enacted by Congress, that is, before other laws amend them. Slip laws are cited as “Public Law XXX-YYY”, where XXX is the number of the Congress in which the bill or resolution was introduced.
- Public Law 111-24:
H.R. 627 (111th): Credit Card Accountability Responsibility and Disclosure Act of 2009
United States Code
The United States Code is the compilation of permanent laws enacted by Congress. Temporary and other non-permanent laws do not appear in the United States Code. (About half of the United States Code is the law itself, called positive law. The other half is merely a compilation of the laws but has no legal significance.)
- Title 12: BANKS AND BANKING
- Chapter 3: FEDERAL RESERVE SYSTEM
- Subchapter XIV: BANK RESERVES
- Section 461: Reserve requirements
- Title 15: COMMERCE AND TRADE
- Chapter 41: CONSUMER CREDIT PROTECTION
- Subchapter I: CONSUMER CREDIT COST DISCLOSURE
- Part A: General Provisions
- Section 1602: Definitions and rules of construction
- Section 1605: Determination of finance charge
- Section 1606: Determination of annual percentage rate
- Part B: Credit Transactions
- Section 1637: Open end consumer credit plans
- Part C: Credit Advertising and Limits on Credit Card Fees
- Section 1665c: Interest rate reduction on open end consumer credit plans
- Section 1665d: Reasonable penalty fees on open end consumer credit plans