[Congressional Record Volume 153, Number 185 (Wednesday, December 5, 2007)]
[Senate]
[Pages S14789-S14790]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WYDEN (for himself and Mr. Obama):
  S. 2411. A bill to require the establishment of a credit card safety 
star rating system for the benefit of consumers, and for other 
purposes; to the Committee on Banking, Housing, And Urban Affairs.
  Mr. WYDEN. Mr. President, credit card debt is hitting American 
families like a wrecking ball, with our families already being hammered 
by skyrocketing fuel prices and the subprime mortgage mess. We have 
seen credit card debt go up almost 25 percent in the last 3 years. I 
have brought to the floor a typical credit card agreement

[[Page S14790]]

that millions of our citizens enter into. It is 44 pages long. You 
can't see it from the chair, but it goes on and on and on with small 
print. It is very obvious to me that buried in all of this legalese, 
buried in all of this technical jargon, is a variety of sneaky terms 
that end up hurting consumers because it is not possible to understand 
what is in much of the key provisions of these agreements. For example, 
we understand folks in New Jersey, Oregon, or anywhere else pay a lot 
of attention to the interest rate provision. They pay a lot of 
attention to the annual fee provision. But they don't notice a lot of 
the little disclosures that end up hidden in the legalese that can end 
up making the real cost of credit significantly higher.
  Last week, I met with students across the State of Oregon. A lot of 
them, with the financial aid cutbacks, are now walking on an economic 
tightrope. They balance their food bills against their fuel bills and 
their fuel bills against their housing costs. They are on an economic 
tightrope. They are getting buried in credit card debt. Very often they 
find, for example, that if they have a credit card, and they are late 
on another payment with someone else, their credit card interest rate 
ends up going up as a result. There may be a small provision in their 
existing credit card agreement that allows it, but nobody, for the most 
part, knows about it.

  Students would say their interest rates would double almost overnight 
with virtually no notice. They would not be given any clear 
communication about what is going on. They would just find their costs 
would arbitrarily skyrocket, and they would again be unable to pay 
their bills.
  Now, I recognize in a free society folks have a constitutional right 
to be foolish, to rack up charges that would not be wise, but they can 
do so anyway in a free society. I do not think most people will do 
that, certainly not the students I met with in Oregon last week, if it 
is possible to understand the terms of these credit cards in 
straightforward, plain and simple English rather than see the key 
provisions buried in all kinds of legalese that you would have to be a 
wizard to sort out.
  So I am proposing today, with the support of our colleague, Senator 
Obama from Illinois, that the Federal Reserve, which has great 
expertise in this area, set up a safety rating system for credit 
cards--not one that evaluates credit card companies on provisions that 
are appropriately evaluated in the marketplace, but on safety matters--
for example, whether a credit card company gives the consumer adequate 
notice before they change terms; whether, for example, they highlight 
the key kinds of changes rather than bury them in the small print.
  I think the Federal Reserve, with the technical expertise they have 
and the independent judgment they bring to these financial questions, 
is the ideal place to develop and operate a safety rating system. Such 
a system has worked quite well for new cars. When you have a rating 
system for cars, people can understand how they would be protected in a 
crash. The legislation I am offering will tell people whether credit 
card companies are treating them fairly and disclosing the key 
provisions so that a free market can work.
  So under the rating system I propose today with Senator Obama, it 
would be required for credit card companies to put on the card itself, 
put on the various promotional materials they are using, stars which, 
in effect, would be granted on the basis of the Federal Reserve's 
independent judgment as to whether the key safety criteria are being 
met.
  I am very hopeful that at a time when our citizens are being pounded 
by powerful economic forces, particularly in the energy and housing 
field, there could at least be bipartisan agreement that the Senate 
could support transparency, disclosure, changes in the credit card 
business, so our consumers--and millions are using these credit cards 
during this holiday season--can understand the agreements they are 
getting into.
  The students I met with last week are taking steps now to better 
police what is going on in the credit card field. On several campuses 
in Oregon, they have moved the credit card companies off campus. Yet 
the credit card companies continue to flood the students with 
promotional material.
  I was told, for example, about one program where students were 
brought into a room where money was essentially floating in the air, 
where it was as if you would be going to a financial paradise if you 
just signed up for one of these credit card agreements.
  I am not proposing heavy-handed regulation. I am not proposing one-
size-fits-all government. I am proposing that an agency with the 
expertise to make sure there is disclosure, that the forms and 
agreements are printed in simple English--that that kind of information 
be rewarded in the marketplace. If companies are not willing to do it, 
the American people could find that out as well.
  That is the kind of simple, straightforward approach--with 
disclosure, transparency, in simple English--that makes sense for the 
digital age. With the Federal Reserve completing that first safety 
rating, all Americans could get that kind of information quickly and 
conveniently. That is what is in the interest of the American people 
with respect to this credit card debt issue at a critical time.
  I hope my colleagues will support the legislation I introduce today 
with Senator Obama.
                                 ______