Financial Services Consumer Protections in Congressional Sights
WASHINGTON -- Consumer protections are more and more on the minds of lawmakers in Washington, including pressing issues like data security and credit card issues.
House Financial Services Committee Majority Staff Counsel Kellie Larkin outlined a host of consumer protection items the panel will be looking at in the 110th Congress, including data security, credit card issues, Katrina recovery and insurance, and housing needs among many others. "We've got a lot on our plate and it's really important that we hear from you," she emphasized.
Particularly after the TJ Maxx breach, Chairman Barney Frank (D-Mass.) is especially interested in data security legislation, which has faced troubles in the past over committee jurisdictional bickering. The Energy & Commerce Committee has already introduced legislation similar to what it had last year, which includes making the Federal Trade Commission a "super regulator" with enforcement authority in the states. Credit unions and the rest of the financial services community have supported previous legislation from the House Financial Services Committee that established a carve-out for financial services providers; Financial Services expects to introduce legislation shortly.
Federal Reserve Director of Consumer and Community Affairs Leonard Chanin focused on credit card disclosures and the regulatory body's progress with Regulation Z updates. He called the task "daunting", but the Fed has been looking at the issues for a couple of years now, particularly focused on open-end credit, mainly consisting of credit cards.
In the past, he explained, "Lawyers and economists get together and write regulations. That's how we end up with the mess we have now." However, Chanin said, the Fed has employed consumer focus groups to test various disclosures. He acknowledged, "There is a limited amount of information that consumers are going to look at."
Also relating to credit cards and of interest to the Fed is how the Department of Defense's regulation concerning the 36% cap on loans to the military will turn out. The federal banking regulators have been granted a consultative role in the drafting. "We will try to ensure that legitimate credit products are not affected," Chanin said.
CUNA Senior Assistant General Counsel Jeff Bloch chimed in that the regulation could be "potentially very problematic" for credit unions, preventing beneficial refinancings for members, among other things.
But Jean Ann Fox, director of consumer protection for the Consumer Federation of America, emphasized that the legislation was targeting unscrupulous lenders targeting the military with refund anticipation loans and other predatory products. She agreed, "[The legislative amendment] wasn't drafted over a long period of time so there are some problems with the wording."
Specifically addressing credit cards during CUNA's Governmental Affairs Conference last week, Fox said, "We appreciate that you can show that there are responsible ways to offer credit cards to your members." --firstname.lastname@example.org