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HOUSE PASSES CREDIT CARDHOLDERS’ BILL OF RIGHTS LEGISLATION UNDER SPECIAL RULE

The House Rules Committee on Monday introduced a resolution (H. Res. 1476) providing for expedited consideration of the Credit Cardholders' Bill of Rights Act of 2008 (H.R. 5244) at any time after the resolution is adopted. Yesterday, the House passed the resolution, promptly considered H.R. 5244 and passed the bill without amendment by a final vote of 312 to 112.

The final bill is the version as amended and approved by the House Financial Services Committee on July 31 and published in House Report 110-857 on September 16. The final bill differs in several respects from the bill as introduced by Rep. Carolyn Maloney in February. Some of the more onerous aspects of the legislation have been eliminated and other provisions now more closely track the proposed rules on unfair or deceptive acts or practices (UDAP) issued by federal regulators in May 2008.

For example, the bill no longer:

  • Prohibits universal default (i.e., using adverse information other than actions or omissions directly related to an account as a basis for increasing any APR on an outstanding balance);
  • Prohibits "any-time any-reason" changes in terms; or
  • Requires issuers to provide an opt-out for APR increases.

The final bill contains new or revised provisions similar to proposed UDAP rules, including provisions that:

  • Prohibit (i) retroactive APR increases except under limited circumstances and (ii) overlimit fees resulting solely from credit holds; and
  • Regulate (i) allocation of payments and (ii) grace periods for accounts with promotional rate or deferred interest balances.

The final bill also contains a new prohibition on the issuance of credit cards to minors.

Although the bill passed by a wide margin, some lawmakers have expressed strong disapproval. Fifteen of the bill's opponents on the Financial Services Committee signed the Dissenting Views portion of House Report 110-857, which criticizes the bill as "ill-conceived legislation" and "an unnecessary exercise in partisan political posturing" in light of pending rulemaking proceedings by federal regulators.