[Congressional Record Volume 155, Number 65 (Thursday, April 30, 2009)]
[House]
[Pages H5003-H5012]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1015
 PROVIDING FOR CONSIDERATION OF H.R. 627, CREDIT CARDHOLDERS' BILL OF 
                           RIGHTS ACT OF 2009

  Mr. PERLMUTTER. Madam Speaker, by direction of the Committee on 
Rules, I call up House Resolution 379 and ask for its immediate 
consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 379

       Resolved, That at any time after the adoption of this 
     resolution the Speaker may, pursuant to clause 2(b) of rule 
     XVIII, declare the House resolved into the Committee of the 
     Whole House on the state of the Union for further 
     consideration of the bill (H.R. 627) to amend the Truth in 
     Lending Act to establish fair and transparent practices 
     relating to the extension of credit under an open end 
     consumer credit plan, and for other purposes. No general 
     debate shall be in order pursuant to this resolution. The 
     bill shall be considered for amendment under the five-minute 
     rule. It shall be in order to consider as an original bill 
     for the purpose of amendment under the five-minute rule the 
     amendment in the nature of a substitute recommended by the 
     Committee on Financial Services now printed in the bill. The 
     committee amendment in the nature of a substitute shall be 
     considered as read. All points of order against the committee 
     amendment in the nature of a substitute are waived except 
     those arising under clause 10 of rule XXI. Notwithstanding 
     clause 11 of rule XVIII, no amendment to the committee 
     amendment in the nature of a substitute shall be in order 
     except those printed in the report of the Committee on Rules 
     accompanying this resolution. Each such amendment may be 
     offered only in the order printed in the report, may be 
     offered only by a Member designated in the report, shall be 
     considered as read, shall be debatable for the time specified 
     in the report equally divided and controlled by the proponent 
     and an opponent, shall not be subject to amendment, and shall 
     not be subject to a demand for division of the question in 
     the House or in the Committee of the Whole. All points of 
     order against such amendments are waived except those arising 
     under clause 9 or 10 of rule XXI. At the conclusion of 
     consideration of the bill for amendment the Committee shall 
     rise and report the bill to the House with such amendments as 
     may have been adopted. Any Member may demand a separate vote 
     in the House on any amendment adopted in the Committee of the 
     Whole to the bill or to the committee amendment in the nature 
     of a substitute. The previous question shall be considered as 
     ordered on the bill and amendments thereto to final passage 
     without intervening motion except one motion to recommit with 
     or without instructions.

  The SPEAKER pro tempore. The gentleman from Colorado is recognized 
for 1 hour.
  Mr. PERLMUTTER. Madam Speaker, for purposes of debate only, I yield 
the customary 30 minutes to the gentleman from Texas (Mr. Sessions).


                             General Leave

  Mr. PERLMUTTER. I ask unanimous consent that all Members be given 5 
legislative days in which to revise and extend their remarks on House 
Resolution 379.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Colorado?
  There was no objection.
  Mr. PERLMUTTER. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, House Resolution 379 provides for consideration of 
H.R. 627, the Credit Cardholders' Bill of Rights Act. On a regular 
basis, constituents of mine from Colorado contact me in disappointment 
with stories about actions taken by their credit card companies. 
Hardworking Americans who make payments on time, have good credit, and 
live within their means see their rates increase without notice and 
without cause.
  In a time when many Americans are struggling to pay their mortgage, 
when health care costs are increasing and many are out of work, unfair 
credit card practices threaten many families. Americans deserve a fair 
shake. They deserve transparency and not smoke and mirrors. They 
deserve reliability and not chaos within their statements.
  The bill brought to us today by Congressman Gutierrez and 
Congresswoman Maloney, the Credit Cardholders' Bill of Rights Act, 
gives consumers a fair deal. Prior to 1990, credit cards had more or 
less standardized rates--around 20 percent--few fees, and they were 
generally offered to persons with high credit standards.
  However, since 1990, card issuers have adopted risk-based pricing, 
and as a result of this new pricing structure, rates have increased and 
fees have increased dramatically. Today's credit cards feature a wide 
variety of interest rates that reflect a complex list of factors. The 
terms of most agreements have become so complicated, consumers don't 
know what they are getting into when they sign on to a credit card 
agreement. Most, if not all, agreements allow the issuer to change the 
interest rate or other terms of agreement at any time for any reason.
  For example, there is something called ``universal default'' in most 
credit card agreements. Universal default allows the credit card 
company to change the rate or change the terms of the credit card 
agreement for something completely unrelated to the credit card. That's 
got to stop.
  There are also practices which allow for credit card companies to 
apply payments to the lowest rate of interest, not the highest rate of 
interest, so that amounts continue to grow under the credit card 
agreements. There are things including double billing cycles so you 
think that you have paid off a substantial portion of the credit card 
but, in fact, you continue to get interest charged against the amount 
you already paid off.
  These are excessive practices, and they must be changed.
  Under H.R. 627, issuers can only raise interest rates for the reasons 
provided within the legislation as proposed.

[[Page H5004]]

  Madam Speaker, the American people have spoken. Too many stories have 
been told, and I think everybody in this Chamber--and certainly in the 
many hearings that we had in Financial Services--all had individual 
stories about credit cards and excessive practices. Americans are tired 
of opening their monthly credit card bill and noticing that their 
interest rate has jumped from 8 percent to 15 percent for no reason. 
H.R. 627 establishes responsible regulation within an industry which 
has taken advantage of many vulnerable Americans.
  Finally, I want to note the careful balance this bill takes. We have 
had over a half dozen hearings on this bill alone. It's the product of 
years of meetings and hearings and conversations and input from all 
interested parties and roughly 60,000 public comments. This bill 
provides the fairness Americans have asked for from their credit card 
companies.
  I urge my colleagues to vote in favor of the rule and the underlying 
bill.
  With that, I reserve the balance of my time.
  Mr. SESSIONS. Madam Speaker, I rise today in opposition to this rule 
and to the underlying legislation.
  This structured rule does not call for the open and honest debate 
that has been promised by my Democratic colleagues time after time.
  Today's action by my friends on the other side of the aisle is 
another example of the Federal Government overstepping its boundaries 
into the private marketplace. And I think it's important for us to note 
that people who get credit cards get this as an extension of their 
opportunity and their credit, and they have a responsibility when they 
sign a contract to live up to that responsibility. It is not a right 
that is being extended, I believe, today for us to go into the free 
market and to tinker with on a Federal basis what is a right that is 
reserved to the States today. We disagree with what is happening today.
  Not even 6 months ago, Madam Speaker, the Federal Reserve passed new 
credit card rules that would protect consumers and provide for more 
transparency and accountability in the marketplace. These new 
regulations are set to take effect in July 2010, an agreed-upon date to 
ensure the necessary time for banks and credit card companies to make 
crucial and critical adjustments to their business practices without 
making mistakes and without harming consumers.
  Part of what the gentleman from Colorado just described, some of the 
60,000 letters of feedback to the industry, took place in that regard. 
It took place to the Federal Reserve taking information, working with 
credit card consumer groups to try and alleviate problems or perceived 
problems in the marketplace. However, with the growing Federal deficit, 
the current economic crisis, and the growing number of unemployed 
people, I would simply ask why is Congress passing legislation that 
already exists? Let's give those statutes and those rules and 
regulations which are going to be in place time to work.
  This legislation allows for the Federal Government to micromanage the 
way credit card companies and the banking industry does its business. 
Those hearings have already been held. Decisions have already been made 
by the Fed. Decisions with credit card companies and consumer groups to 
understand what changes needed to be made, they've already happened.
  If enacted into law, it is not credit card companies that will 
suffer. It will be every single person that has a credit card and for 
those who even want to have a credit card in the future. Every American 
will see an increase in their interest rates, and some of the current 
benefits that encourage responsible lending will most likely disappear. 
For example, cash advances, over-the-limit protection, would be just 
one example.
  My friends on the other side of the aisle not only remove any 
incentive for using credit cards responsibly, but they punish those 
managing their credit responsibly to subsidize those who are 
irresponsible. Madam Speaker, the Democrats also want to limit the 
amount of credit that is available to the middle class and low-income 
individuals. The very Americans that take the most advantage of credit 
will be harmed by what we're doing here today.
  This legislation prevents credit history from being used to price 
risk, as an example, meaning that some individuals may not now be able 
to get a credit card, especially if they are lower-income or they have 
blemished credit histories or are trying to establish credit for the 
first time, like college students.
  Additionally, the strain of this legislation could have a direct and 
adverse effect on small businesses which use this credit, especially in 
times like these where economic and job growth in this country are 
threatened. For individuals starting in a small business, this 
legislation means increased interest rates, reduced benefit, and 
shrinks the availability of credit, potentially limiting their options 
to even succeed in the marketplace.
  Meredith Whitney, a prominent banking analyst, in speaking as a 
result of this legislation, remarked in The Wall Street Journal that 
she expects a $2.7 trillion decrease in credit by the end of 2010 out 
of the current $5 trillion credit line available in this country.
  Madam Speaker, at a time when we're in economic downturns, the option 
of credit that is available for people--notwithstanding that they may 
have to pay a little bit more but will have the flexibility to have 
that credit--is important.
  In the current state of our economy, we urgently would say we need to 
increase liquidity and lower the cost of credit to stimulate more 
lending--not raise rates and reduce the availability of credit.

                              {time}  1030

  This is not a solution for the ailing economy.
  This type of government control of private markets is really what my 
Democrat colleagues and this new administration have been exploring for 
quite some time. Whether it is federalizing our banks, federalizing our 
credit market, federalizing our health care system, federalizing the 
energy sector, this is what this new administration and my friends in 
the majority party wish to do.
  That said, this administration has taken their power grab a step 
further, first of all, in this legislation, to write contracts, to hire 
and fire executives, and to guarantee muffler warranties. They won't 
let banks pay back their loans. And now they are plotting a hostile 
takeover of the financial services industry, converting preferred 
shares into common equity shares, a drastic shift towards a government 
strategy of long-term ownership and involvement in some of our banks.
  Millions of Americans are outraged at the mismanagement of TARP and 
the reckless use of their tax dollars, and I believe that taxpayers are 
increasingly uneasy with the Federal Government's growing involvement 
in financial markets that we see on the floor today.
  In an effort to provide more protections to consumers and to 
taxpayers, I offered an amendment yesterday in the Rules Committee--a 
Rules Committee of which I have served for 11 years--that was defeated 
by a party-line vote of 7-3.
  Madam Speaker, I would like to insert in the Congressional Record a 
copy of that amendment.

                   Amendment to H.R. 627, as Reported

                    Offered by Mr. Sessions of Texas

       Add at the end the following new section:

     SEC. 11. PROHIBITION ON THE USE OF TARP FUNDS TO PURCHASE 
                   COMMON STOCK.

       Title I of the Emergency Economic Stabilization Act of 2008 
     (12 U.S.C. 5201) is amended by adding at the end the 
     following new section:

     ``SEC. 137. PROHIBITION ON PURCHASE OF COMMON STOCK.

       ``Notwithstanding any other provision of this title, the 
     Secretary may not, under the TARP--
       ``(1) purchase common stock of any financial institution; 
     or
       ``(2) convert any warrant, preferred stock, or other 
     security purchased by the Secretary under the TARP into 
     common stock of any financial institution.''.

  This amendment would prohibit the Treasury Department from swapping 
its preferred stock for common stock. The amendment would protect 
taxpayers, and also keep the Federal Government from engaging itself in 
the nationalization of our banks.
  To preempt the de facto naturalization of our financial systems, on 
February 3, 2009, the House Republican

[[Page H5005]]

leadership, including myself, sent a letter to Secretary Geithner 
regarding what was referred to as the ``range of options'' this 
administration was considering in managing the $700 billion of taxpayer 
monies.
  Madam Speaker, I would like to insert into the Congressional Record a 
copy of this letter.

                                Congress of the United States,

                                 Washington, DC, February 3, 2009.
     Hon. Timothy F. Geithner,
     Secretary, Department of the Treasury,
     Washington, DC.
       Dear Secretary Geithner: Recent reports indicate that the 
     Administration is considering a ``range of options'' for 
     spending the second tranche of the Troubled Asset Relief 
     Program (TARP) released last week and that the Administration 
     is considering whether to ask the Congress for new and 
     additional TARP funds beyond the $700 billion already 
     provided. We are writing to raise serious questions about the 
     efficacy of the options being considered and to ask whether 
     the Administration is developing a strategy to exit the 
     bailout business.
       Because the Administration has committed itself to 
     assisting the auto industry, satisfying commitments made by 
     the previous Administration, and devoting up to $100 billion 
     to mitigate mortgage foreclosures, it has been reported that 
     President Obama might need more than the $700 billion 
     authorized by the Emergency Economic Stabilization Act 
     (``EESA'') to fund a ``bad bank'' to absorb hard-to-value 
     toxic assets. In light of these commitments--which come at a 
     time when the Federal Reserve is flooding the financial 
     system with trillions of dollars and the Congress is 
     finalizing a fiscal stimulus that is expected to cost 
     taxpayers more than $1.1 trillion--it is not surprising that 
     the American people are asking where it all ends, and whether 
     anyone in Washington is looking out for their wallets.
       Indeed, a bipartisan majority of the House--171 Republicans 
     and 99 Democrats--recently expressed the same concerns, 
     voting to disapprove releasing the final $350 billion from 
     the TARP. As we noted in our December 2, 2008 letter to then-
     Secretary Paulson and Chairman Bernanke, we realize that 
     changing conditions require agility in developing responses. 
     However, the seemingly ad hoc implementation of TARP has led 
     many to wonder if uncertainty is being added to markets at 
     precisely the time when they are desperately seeking a sense 
     of direction. It has also intensified widespread skepticism 
     about TARP among taxpayers, and prompted misgivings even 
     among some who originally greeted the demands for the 
     program's creation with an open mind. Accordingly, we request 
     answers to the following questions:
       1. How does the Administration plan to maximize taxpayer 
     value and guarantee the most effective distribution of the 
     remaining $350 billion of TARP funds?
       2. How is the Administration lending, assessing risk, 
     selecting institutions for assistance, and determining 
     expectations for repayment?
       3. Will the Administration opt for a complex ``bad bank'' 
     rescue plan? How can the ``bad bank'' efficiently price 
     assets and minimize taxpayer risk? Will financial 
     institutions be required to give substantial ownership stakes 
     to the Federal government to participate in the program?
       4. Is a ``bad bank'' plan an intermediate step that leads 
     to nationalizing America's banks?
       5. Can you elaborate on your plans for the use of an 
     insurance program for toxic assets? Specifically, will you 
     seek to price insurance programs to ensure that taxpayer 
     interests are protected? If so. how will you do so?
       6. What is the exit strategy for the government's sweeping 
     involvement in the financial markets?
       Thank you for your consideration of these important 
     questions.
           Sincerely,
         John Boehner, Mike Pence, Cathy McMorris-Rodgers, Roy 
           Blunt, Eric Cantor, Thaddeus McCotter, Pete Sessions, 
           David Dreier, Kevin McCarthy, Spencer Bachus.

  The letter outlined a host of questions that dealt with ensuring that 
taxpayers were paid back and an exit strategy for the government's 
sweeping involvement in the financial markets. Today is April 30, and 
almost 2 months later we have not received a response. I am on the 
floor today asking that Secretary Geithner please respond back to this 
letter that is over 60 days old.
  Last week, the Special Inspector General for the Troubled Asset 
Relief Program, TARP, published a report that reveals at least 20 
criminal cases of fraud in the bailout program and determined that new 
actions by President Obama's administration are ``greatly increasing 
taxpayer exposure to losses with no corresponding increase in potential 
profits.''
  This administration is not above oversight and accountability. We are 
asking for the Secretary to do what my colleagues in the majority asked 
of George Bush, please provide in writing that accountability, 
notifying this Congress what we can count on and what the exit strategy 
would be. The American people deserve answers for their use of tax 
dollars and an exit strategy for taxpayer-funded bailouts, including 
how their investment in TARP will be used. That is why I sent yet 
another letter to Secretary Geithner, as it neared the 60-day mark, 
expressing grave concern to the new reports of Treasury moving taxpayer 
dollars into riskier investments in the banking structure.
  Madam Speaker, I would also like to insert this letter into the 
Congressional Record.

                                     House of Representatives,

                                    Washington DC, April 23, 2009.
     Hon. Timothy Geithner,
     Secretary, Department of the Treasury,
     Washington, DC.
       Dear Secretary Geithner: I am greatly concerned by recent 
     news reports that the Administration is considering 
     converting the government's preferred stock in some of our 
     nation's largest banks--investments acquired through the TARP 
     program--into common equity shares in these publicly-held 
     companies.
       As you are aware, these investments were originally made to 
     their recipients at fixed rates for a fixed period of time--
     signaling that their intent was to provide these banks with 
     short-term capital for the purpose of improving our financial 
     system's overall position during a time of crisis. Converting 
     these shares into common equity, however, signals a drastic 
     shift away from the Administration's original purpose for 
     these investments to a new strategy of long-term ownership of 
     and involvement in these companies.
       I am concerned that converting these preferred shares into 
     common equity would have two serious and negative effects. 
     First, it would bring the banks whose shares are converted 
     closer to de facto nationalization by creating the potential 
     for the government to play an increasingly activist role in 
     their day-to-day operations and management.
       Second, I am concerned that moving these investments 
     further down the bank's capital structure into a riskier 
     position puts American taxpayer dollars at increased risk of 
     being lost in the event of a recipient's insolvency.
       To date, no Administration official has provided the House 
     Republican Leadership with any comprehensive answers to the 
     serious questions raised in our February 2, 2009 letter to 
     you about the Administration's exit strategy for the 
     government's growing involvement in the financial markets.
       In absence of the Administration's response to that letter, 
     I would appreciate your prompt assurance that converting 
     these preferred shares to common equity--thereby taking these 
     companies closer to nationalization and putting taxpayers' 
     money at increased risk--is not a part of the 
     Administration's yet-to-be-articulated strategy on getting 
     out of the bailout business.
       Thank you in advance for your prompt attention to this 
     issue of critical importance to me, the residents of Texas' 
     32nd District and the entire taxpaying American public. If 
     you have any questions regarding this letter, please feel 
     free to have your staff contact my Chief of Staff Josh 
     Saltzman.
           Sincerely,
                                                    Pete Sessions,
                                               Member of Congress.

  As this Democrat majority continues to tax, borrow, and spend 
Americans' hard-earned tax dollars, we move closer and closer to 
nationalizing our banking and credit systems that will only deepen our 
current economic struggle.
  The Federal Government is interfering and hindering our progress, not 
helping it. When Congress or the administration changes the rules, it 
should be in the best interests of the American public and the 
taxpayer. By not making my amendment in order today, I can say that 
this Congress has turned its back on what I believe is responsible 
public policy to say that this Federal Government should not invest in 
the free enterprise system.
  Madam Speaker, it is appropriate to consider new ways to protect 
credit consumers from unfair and deceptive practices and to ensure that 
Americans receive useful and complete disclosures about the terms and 
conditions. But in doing so, we must make sure that we do nothing to 
make credit cards more expensive for those who use credit responsibly, 
or to cut off or hinder access to credit for small businesses who count 
on this credit, but perhaps those with less than perfect credit 
histories.
  While reading The Wall Street Journal last week, I came across an op-
ed called ``Political Credit Cards,'' discussing this very issue. It 
states, ``Our politicians spend half their time berating banks for 
offering too much credit on too easy terms and the other half berating 
banks for handing out too little credit at a high price. The bankers 
should tell the President that they need to start getting out of the 
business, and that Washington should quit changing the rules.'' This 
speaks to

[[Page H5006]]

what happened with TARP. It also speaks clearly to health care, 
welfare, taxes, and this underlying legislation today. Madam Speaker, 
the American people deserve better from their elected officials.
  I would also note that I thought it was interesting that this new 
Democrat majority, just this week, as we passed what I consider to be 
an irresponsible $3.5 trillion new budget, the very next vote was on 
encouraging Americans to understand financial security and integrity. I 
think Congress could use a little bit of what it hands out to study for 
itself and to gain the discipline to understand that the free 
enterprise system works best when we leave it alone.
  Madam Speaker, I reserve the balance of my time.
  Mr. PERLMUTTER. I appreciate my friend from Texas complaining about 
every issue facing America today, but the issue in front of Congress 
today deals with the Credit Cardholders' Bill of Rights. That is the 
purpose we are here for this morning, that is the purpose of the rule.
  I would agree with my friend from Texas, as he discussed the Federal 
Reserve and the comment taking that it has made and the rules that it 
has promulgated, but for the actions taken by Congresswoman Carolyn 
Maloney and Congressman Luis Gutierrez, there would have been no 
movement. That whole credit card effort by the Federal Reserve took 
years and years. It was stalled. And thank goodness action was taken by 
those two legislators in moving this forward.
  This bill needs to move forward. People in America expect to be 
treated properly and fairly in their financial dealings, and that is 
the purpose of this legislation.
  With that, I yield 2 minutes to my friend from Wisconsin (Mr. Kagen).
  Mr. KAGEN. Thank you, Congressman Perlmutter.
  I rise in strong support of the rule for supporting the Credit 
Cardholders' Bill of Rights.
  In these difficult economic times, all credit cardholders across the 
country should ask themselves, whose side are we on? Are we on the side 
of ordinary people? Are we on the side of consumers who are working 
hard to pay their bills every month? Or are we sitting in the boardroom 
of the big banks? Whose side are we on?
  We must protect the hardworking taxpayers everywhere in this country. 
I am working hard for the families of northeast Wisconsin, who I have 
the honor of representing. For too long, consumers everywhere, 
including Wisconsin, have been victimized by high fees, by increasing 
interest rates, and confusing credit card agreements that have allowed 
banks to jack up interest rates at their own pleasure and at consumers' 
expense.
  The Credit Cardholders' Bill of Rights will protect everyone from 
unfair and abusive practices. In short, it will prevent companies from 
constantly moving the goalpost and taking advantage of people who 
haven't done anything wrong.
  You know, when I grew up in northeast Wisconsin, on the playground we 
used to call this changing of the rules and interest rates, we used to 
call that ``party shop'' rules. If you work hard and play by the rules, 
you should be able to get ahead and receive credit at a price we can 
afford to pay.
  For these reasons, I urge my colleagues to support this rule and pass 
the Credit Cardholders' Bill of Rights. And someday soon, I hope we 
will also bring fairness to the merchants who suffer from excessive 
bank interchange fees, which is not yet part of this legislation.
  Mr. SESSIONS. Madam Speaker, I referred to an article in The Wall 
Street Journal on March 10 of this year by Meredith Whitney. I would 
like to insert that into the Record, also.

             [From the Wall Street Journal, Mar. 10, 2009]

                Credit Cards Are the Next Credit Crunch

                         (By Meredith Whitney)

       Few doubt the importance of consumer spending to the U.S. 
     economy and its multiplier effect on the global economy, but 
     what is under-appreciated is the role of credit-card 
     availability in that spending. Currently, there is roughly $5 
     trillion in credit-card lines outstanding in the U.S., and a 
     little more than $800 billion is currently drawn upon. While 
     those numbers look small relative to total mortgage debt of 
     over $10.5 trillion, credit-card debt is revolving and 
     accordingly being paid off and drawn down over and over, 
     creating a critical role in commerce in America.
       Just six months ago, I estimated that at least $2 trillion 
     of available credit-card lines would be expunged from the 
     system by the end of 2010. However, today, that estimate now 
     looks optimistic, as available lines were reduced by nearly 
     $500 billion in the fourth quarter of 2008 alone. My revised 
     estimates are that over $2 trillion of credit-card lines will 
     be cut inside of 2009, and $2.7 trillion by the end of 2010. 
     Inevitably, credit lines will continue to be reduced across 
     the system, but the velocity at which it is already occurring 
     and will continue to occur will result in unintended 
     consequences for consumer confidence, spending and the 
     overall economy. Lenders, regulators and politicians need to 
     show thoughtful leadership now on this issue in order to 
     derail what I believe will be at least a 57% contraction in 
     credit-card lines.
       There are several factors that are playing into this swift 
     contraction in credit well beyond the scope of the current 
     credit market disruption. First, the very foundation of 
     credit-card lending over the past 15 years has been 
     misguided. In order to facilitate national expansion and vast 
     pools of consumer loans, lenders became overly reliant on 
     FICO scores that have borne out to be simply unreliable. 
     Further, the bulk of credit lines were extended during a time 
     when unemployment averaged well below 6%. Overly optimistic 
     underwriting standards made more borrowers appear 
     creditworthy. As we return to more realistic underwriting 
     standards, certain borrowers will no longer appear worth the 
     risk, and therefore lines will continue to be pulled from 
     those borrowers.
       Second, home price depreciation has been a more reliable 
     determinant of consumer behavior than FICO scores. Hence, 
     lenders have reduced credit lines based upon ``zip codes,'' 
     or where home price depreciation has been most acute. Such a 
     strategy carries the obvious hazard of putting good customers 
     in more vulnerable liquidity positions simply because they 
     live in a higher risk zip code. With this, frequency of 
     default is increased. In other words, as lines are pulled and 
     borrowing capacity is reduced, paying borrowers are pushed 
     into vulnerable financial positions along with nonpaying 
     borrowers, and therefore a greater number of defaults in fact 
     occur.
       Third, credit-card lenders are currently playing a game of 
     ``hot potato,'' in which no one wants to be the last one 
     holding an open credit-card line to an individual or 
     business. While a mortgage loan is largely a ``monogamous'' 
     relationship between borrower and lender, an individual has 
     multiple relationships with credit-card providers. Thus, as 
     lines are cut, risk exposure increases to the remaining 
     lender with the biggest line outstanding.
       Here, such a negative spiral strategy necessitates 
     immediate action. Currently five lenders dominate two thirds 
     of the market. These lenders need to work together to protect 
     one another and preserve credit lines to able paying 
     borrowers by setting consortium guidelines on credit. We, as 
     Americans, are all in the same soup here, and desperate times 
     are requiring of radical and cooperative measures.
       And fourth, along with many important and necessary 
     mandates regarding fairness to consumers, impending changes 
     to Unfair and Deceptive Acts or Practices (UDAP) regulations 
     risk the very real unintended consequence of cutting off vast 
     amounts of credit to consumers. Specifically, the new UDAP 
     provisions would restrict repricing of risk, which could in 
     turn restrict the availability of credit. If a lender cannot 
     reprice for changing risk on an unsecured loan, the lender 
     simply will not make the loan. This proposal is set to be 
     effective by mid-2010, but talk now is of accelerating its 
     adoption date. Politicians and regulators need to seriously 
     consider what unintended consequences could occur from the 
     implementation of this proposal in current form. Short of the 
     U.S. government becoming a direct credit-card lender, 
     invariably credit will come out of the system.
       Over the past 20 years, Americans have also grown to use 
     their credit card as a cash-flow management tool. For 
     example, 90% of credit-card users revolve a balance (i.e., 
     don't pay it off in full) at least once a year, and over 45% 
     of credit-card users revolve every month. Undeniably, 
     consumers look at their unused credit balances as a ``what 
     if' reserve. ``What if' my kid needs braces? ``What if' my 
     dog gets sick? ``What if' I lose one of my jobs? This unused 
     credit portion has grown to be relied on as a source of 
     liquidity and a liquidity management tool for many U.S. 
     consumers. In fact, a relatively small portion of U.S. 
     consumers have actually maxed out their credit cards, and 
     most currently have ample room to spare on their unused 
     credit lines. For example, the industry credit line 
     utilization rate (or percentage of total credit lines 
     outstanding drawn upon) was just 17% at the end of 2008. 
     However, this is in the process of changing dramatically.
       Without doubt, credit was extended too freely over the past 
     15 years, and a rationalization of lending is unavoidable. 
     What is avoidable, however, is taking credit away from people 
     who have the ability to pay their bills. If credit is taken 
     away from what otherwise is an able borrower, that borrower's 
     financial position weakens considerably. With two-thirds of 
     the U.S. economy dependent upon consumer spending, we should 
     tread carefully and act collectively.

  Essentially what this person is arguing, a person who looks at the 
markets

[[Page H5007]]

every day, credit in this country, and I quote from this, ``Currently, 
there is roughly $5 trillion in credit card lines outstanding in the 
United States, and a little bit more than $800 billion is currently 
drawn upon.''
  What we are saying is that people do have the ability to utilize more 
of their credit with credit cards. And I believe the vast majority of 
consumers are carefully and thoughtfully understanding that when they 
sign an agreement with a credit card company, that they understand that 
what they need to do is pay that back, and if not, that there will be a 
penalty, a fee, or interest that will be charged as a result of that.
  The free market today has lots of credit cards, lots of different 
companies, lots of different options that are available to people. But 
with what we are doing here today, that is going to change the way 
people do business for the vast majority of credit card users. It means 
that, today, if you follow all the rules, you pay either the first 
month or, properly what you're doing, that you are willing to keep that 
credit card because you need it without having to pay the penalty or 
the associated penalty to the risk that you have. Tomorrow, we are 
going to take risk out of the risky people and put the risk on 
everybody. And that is really what Meredith Whitney is trying to say 
here. Of the trillions of dollars that are available, credit card 
companies only draw down $800 billion. That is because the vast 
majority of people, very effectively and properly, use the credit that 
is available to them.
  The system does and did need tinkering; but when we tinker with that 
system, we should make sure that what we do is to add transparency, not 
rules and regulations that inflict what they do, and the changes, onto 
a contract willingly signed by a consumer.
  Madam Speaker, I reserve the balance of my time.
  Mr. PERLMUTTER. Madam Speaker, I yield 2 minutes to the gentlewoman 
from California (Ms. Eshoo).
  Ms. ESHOO. I thank the gentleman for yielding the time and for his 
effective management of the rule.
  I am very proud to be on the floor today to support the Credit 
Cardholders' Bill of Rights. I think it is about time that this bill 
came to the floor. Why? There is a demand on the part of the American 
people because they know they are being abused.
  There are two bills that come every month to almost every household, 
certainly one, the utility bill, people study that, and the other, 
their credit card bill. Now, there is no doubt in my mind that America 
really has to go on a credit diet and that we will come through this 
economic crisis in a different and a better way. But credit is very 
important in our country because two-thirds of our national economy is 
comprised of consumer spending. And so credit cards, how they are used, 
and what people are charged in that usage, is very important.
  In recent months, customers have seen their credit card payments 
skyrocket, with sudden and sharp increases in interest rates, confusing 
repayment schedules, all in an effort for the banks and the credit card 
companies to recoup their financial losses from other things that they 
have done.
  Good, stable credit card customers have watched as their existing 
balances tripled and even quadrupled without warning and without 
justification. Credit card defaults are at an all-time high. When we 
reform this, this is going to help to stimulate our economy by putting 
more dollars back into the hands of consumers and not in coffers of the 
credit card companies. These companies will no longer be allowed to 
penalize cardholders who pay on time or shift allocation of payments to 
maximize interest rates. It is a rope-a-dope system that is being 
foisted on the American people, and we all know it. That is why we have 
to take this step today.
  I salute Representatives Maloney and Gutierrez for their tenacity in 
bringing this bill to the floor. I hope all Members will support this, 
and the American people will know by the votes in the House who is 
standing on their side.

                              {time}  1045

  Mr. SESSIONS. Madam Speaker, I yield myself 3 minutes.
  Madam Speaker, one of the amendments that was talked about earlier 
that was denied in the Rules Committee deals with an issue that 
Secretary Geithner and the Treasury Department have openly talked 
about, and that is their decision to look at the possibility of taking 
that preferred stock which TARP funds were bought into and converting 
that to common stock. On April 21 there was an article in The Wall 
Street Journal that talked about this. It's entitled ``A Backdoor 
Nationalization.''
  The bottom line is that immediately after this appeared in the press, 
the stock market promptly tumbled by 3.5 percent, meaning once again 
bad news to the marketplace, with J.P. Morgan falling 10 percent and 
financial stocks as a group more than 9 percent. This was on April 20.
  What this is about is that it would be a wholesale conversion, which 
would mean that the government would own a larger portion of banks, 
even more and even in a different way than they would with preferred 
stock. The Wall Street Journal says this is a back door to 
nationalization. That is because it would create uncertainty, not more 
certainty, by offering the specter of even greater lengths of periods 
of Federal control over the banking system.
  Perhaps even worse than that, what they would do is they would seek 
to transfer and force banks to do this because of the frailty of the 
banks at this point. It means that the government would force a change 
of a contract from a bank that they may have.
  Madam Speaker, that amendment should have been made in order. This 
Congress should be out on this as a policy, and we should be speaking 
up about this. Even though the amendment was not made in order, I 
encourage the Financial Services Committee of this Congress to make 
sure that they hold hearings on this exact issue.

             [From the Wall Street Journal, Apr. 21, 2009]

A Backdoor Nationalization--The Latest Treasury Brainstorm Will Retard 
                           a Banking Recovery

       Just when you think the political class may have learned 
     something in months of trying to fix the banking system, the 
     ghost of Hank Paulson returns to haunt the Treasury. The 
     latest Beltway blunder--and it would be a big one--is the 
     Obama Administration's weekend news leak that it may insist 
     on converting its preferred shares in some of the nation's 
     largest banks into common equity.
       The stock market promptly tumbled by more than 3.5% 
     yesterday, with J.P. Morgan falling 10% and financial stocks 
     as a group off 9%, as measured by the NYSE Financials index. 
     Note to White House: Sneaky nationalizations aren't any more 
     popular with investors than the straightforward kind.
       The occasion for this latest nationalization trial balloon 
     is the looming result of the Treasury's bank strip-tease--
     a.k.a. ``stress tests.'' Treasury is worried, with cause, 
     that some of the largest banks lack the capital to ride out 
     future credit losses. Yet Secretary Timothy Geithner and the 
     White House have concluded that they can't risk asking 
     Congress for more bailout cash.
       Voila, they propose a preferred-for-common swap, which can 
     conjure up an extra $100 billion in bank tangible common 
     equity, a core measure of bank capital. Not that this really 
     adds any new capital; it merely shifts the deck chairs on 
     bank balance sheets. Why Treasury thinks anyone would find 
     this reassuring is a mystery. The opposite is the more likely 
     result, since it signals that Treasury no longer believes it 
     can tap more public capital to support the financial system 
     if the losses keep building.
       Worse, wholesale equity conversion would mean the 
     government owns a larger share of more banks and is more 
     entangled than ever in their operations. Giving Barney Frank 
     more voting power is more likely to induce panic than restore 
     confidence. Simply look at the reluctance of some banks--
     notably J.P. Morgan Chase--to participate in Mr. Geithner's 
     private-public toxic asset sale plan. The plan is rigged so 
     taxpayers assume nearly all the downside risk, but the banks 
     still don't want to play lest Congress become even more 
     subject to political whim.
       A backdoor nationalization also creates more uncertainty, 
     not less, by offering the specter of an even lengthier period 
     of federal control over the banking system. And it creates 
     the fear of even more intrusive government influence over 
     bank lending and the allocation of capital. These fears have 
     only been enhanced by the refusal of Treasury to let more 
     banks repay their Troubled Asset Relief Program (TARP) money.
       As it stands, banks and their owners at least know how much 
     they owe Uncle Sam, and those preferred shares represent a 
     distinct and separate tier of bank capital. Once the 
     government is mixed in with the rest of the equity holders, 
     the value of its investments--and the cost to the banks of 
     buying out the Treasury--will fluctuate by the day.
       Congress is also still trying to advance a mortgage-
     cramdown bill that would hammer the value of already 
     distressed mortgage-backed securities, and now the 
     Administration is talking up legislation to curb credit-

[[Page H5008]]

     card fees and interest. Both of these bills would damage bank 
     profits, but large government ownership stakes would leave 
     the banks helpless to oppose them. (See Citigroup, 36% owned 
     by the feds and now a pro-cramdown lobbyist.)
       We've come to this pass in part because the Obama 
     Administration is afraid to ask Congress for the money for a 
     meaningful bank recapitalization. And it may need that money 
     now in part because Mr. Paulson's Treasury insisted on buying 
     preferred stock in all the big banks instead of looking at 
     each case on its merits. That decision last fall squandered 
     TARP money on banks that probably didn't need it and left the 
     Administration short of funds for banks that really do.
       The sounder strategy--and the one we've recommended for two 
     years--is to address systemic financial problems the old-
     fashioned way: bank by bank, through the Federal Deposit 
     Insurance Corp. and a resolution agency with the capacity to 
     hold troubled assets and work them off over time. If the 
     stress tests reveal that some of our largest institutions are 
     insolvent or nearly so, it's then time to seize the bank, 
     sell off assets and recapitalize the remainder. (Meanwhile, 
     the healthier institutions would get a vote of confidence and 
     could attract new private capital.)
       Bondholders would take a haircut and shareholders may well 
     be wiped out. But converting preferred shares to equity does 
     nothing to help bondholders in the long run anyway. And 
     putting the taxpayer first in line for any losses alongside 
     equity holders offers shareholders little other than an 
     immediate dilution of their ownership stake. Treasury's 
     equity conversion proposal increases the political risks for 
     banks while imposing no discipline on shareholders, 
     bondholders or management at failed or failing institutions.
       The proposal would also be one more example of how Treasury 
     isn't keeping its word. When he forced banks to accept public 
     capital whether they needed it or not, Mr. Paulson said the 
     deal was temporary and the terms wouldn't be onerous. To 
     renege on those promises now will only make a bank recovery 
     longer and more difficult.

  Madam Speaker, I reserve the balance of my time.
  Mr. PERLMUTTER. Madam Speaker, I would like to yield 2 minutes to my 
friend from Virginia (Mr. Moran).
  Mr. MORAN of Virginia. Well, it looks like another party-line vote, 
another partisan exercise.
  My friend from Texas leading the opposition says that free enterprise 
works best when we leave it alone. Really? We have tried that approach 
for the last 8 years, cutting taxes and deregulating businesses. And 
where has it led us? To the worst financial crisis since the Great 
Depression. Trillions of dollars lost to this economy, millions of 
jobs, and our largest debt holder is Communist China. They're the only 
ones that came out whole from your experiment.
  Now, it's true that we've had some of the largest corporate profit in 
history over the last 8 years, but much of it came from moving money 
around, in some cases deluding homebuyers and squeezing credit 
cardholders. And, in fact, 94 percent of the income growth went to the 
top 10 percent, leaving about 6 percent of income growth for the bottom 
90 percent. And so what did they do? They borrowed more and more from 
their home equity values, and they borrowed more and more from their 
credit cards.
  And now what we're doing is to step over on to the side of the 
consumer and the homeowner. And that's why we have had any number of 
pieces of legislation to protect homebuyers so they could stay in their 
home, make their mortgage payments. And now we're dealing with credit 
cardholders. And we're not being unfair. All this is imposing fair 
business practices, looking out for the consumer, because the fact is 
that they have been subject to very unfair practices, arbitrary 
interest rate increases, over-the-limit fees. Cardholders who pay on 
time are hit with unfair penalties, due-date gimmicks, any number of 
things that this legislation addresses, appropriately.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. PERLMUTTER. I yield the gentleman an additional 30 seconds.
  Mr. MORAN of Virginia. I can't imagine that we would be opposing fair 
business practices that all of us would want for our children, for our 
parents, for our friends.
  None of these are unreasonable. They should have been done years ago. 
I hope, for example, we will even add to them by letting people know if 
they only pay the minimum monthly payment when they will ever be able 
to pay off their credit card debt. Stop sending all these credit cards 
to young people on college campuses. Thirty-six credit cards the 
average American family is getting. It's out of control.
  It's time to put it under control. Let's pass this unanimously.
  Mr. SESSIONS. Madam Speaker, I appreciate the gentleman from Virginia 
coming down and setting the record straight about how the Bush 
administration has caused all these problems and all these tax cuts. 
But I would remind the gentleman that the greatest economic boom in the 
history of the United States and the world occurred during the time 
that we encouraged and incentivized investors to be a part of growing 
our economy.
  As I recall, the facts of the case are that 3 years ago when our 
friends, the Democrats, became the new majority, they announced quite 
openly that those tax cut days were over with, and that's when the 
investor left. And when the investor left, that's when our economy 
started going downhill.
  Let's tell the truth here. What we just passed just yesterday was the 
largest spending budget in the history of the universe that will lead 
to a debt that will double and triple, double and triple, in the next 
few years. That is a national security issue. And that's part of what 
we are talking about here today. The interference in the marketplace by 
my friends, the Democrats, that not only wiped out, took the investor 
out of the equation, but today are going to create an even worse 
circumstance for credit cardholders at a time when the extension of 
credit is needed more than ever.
  Madam Speaker, I reserve the balance of my time.
  Mr. PERLMUTTER. Madam Speaker, I would like to yield 1 minute to the 
gentleman from Chicago, Illinois (Mr. Quigley).
  Mr. QUIGLEY. Madam Speaker, this is a fascinating debate for me 
because, for 7 years as a university professor, I have been able to see 
how this process actually works and begins. I saw the credit card 
companies literally trolling the campuses offering jerseys and 
sweatshirts for the honor of students to buy pizzas at 18 to 21 percent 
interest rates.
  There is no doubt that credit card companies provide a valuable 
service for hardworking Americans, but they are the ones changing the 
rules. In recent years credit card companies have begun to abuse this 
system. They've implemented deceptive provisions and have burdened the 
average consumer with extraordinary high rates and fees.
  If you pay your balance on time and you spend below your credit 
limit, you should not be subject to arbitrary interest rates and 
increases. These credit card companies deserve to make a profit, but 
not at the expense of the American consumer.
  This bill is about reforming that system. It puts safeguards in place 
that will help inform consumers and empower them to take control of 
their credit and, therefore, their lives.
  Mr. SESSIONS. Madam Speaker, I reserve the balance of my time.
  Mr. PERLMUTTER. Madam Speaker, I would like to yield 2 minutes to the 
gentlewoman from Texas (Ms. Jackson-Lee).
  (Ms. JACKSON-LEE of Texas asked and was given permission to revise 
and extend her remarks.)
  Ms. JACKSON-LEE of Texas. Madam Speaker, this has been a week for 
America, fighting the H1N1 virus and coming together as a Nation. But 
at the same time, this Congress and this administration have invested 
in America's going forward with passing our budget resolution and 
thank, thank, thank whoever you desire to thank, including the sponsors 
of this bill, finally a credit cardholders' bill of rights.
  Last year in 2008, $19 billion in penalty fees on families with 
credit cards dealing with late fees, over-the-limit fees, and other 
penalties. This year, $20 billion. This is crashing down on the heads 
of hardworking families, college students. Enough is enough.
  I am proud to stand up and support legislation that says to the 
American people you are in charge, not the abusive, under-the-table 
focus of credit card companies who continuously handle their business 
wrongheadedly, charging over-the-limit fees. And, therefore, this bill 
will limit to three the number of over-the-limit fees companies can 
charge for the same transaction. Can you imagine, they were doing it 
over and over and over again. It ends unfair double-cycle billing, ends 
the fact that you might be paying your

[[Page H5009]]

bill on time and yet they raise your interest rate without notice.
  An amendment that I support as well is one that indicates if you were 
to lose your card, the credit card company should notify credit 
cardholders 30 days before closing their account, give the reason 
foreclosure, options to keep the account open, programs available to 
repay the balance, and the resulting impact on their credit card score.
  Sometimes people are surviving on their credit card, but they're 
paying their bill. But yet the credit card companies have no mercy. And 
they don't have any mercy when they go after our children on college 
campuses and the parents don't even know that the children have it. 
Limit the credit card balance or the amount when young people are 
involved.
  This is a great bill. Thank goodness for the credit cardholders' bill 
of rights for the American people.
  Madam Speaker, Americans are taught to work hard and make money and 
to buy a house, but we are never taught about financial literacy. In 
these tough economic times, it is imperative that Americans know about 
financial literacy; it is crucial to our survival. Americans need to be 
prepared to make informed financial choices. Indeed, we must learn how 
to effectively handle money, credit, debt, and risk. We must become 
better stewards over the things that we are entrusted. By becoming 
better stewards, Americans will become responsible workers, heads of 
households, investors, entrepreneurs, business leaders and citizens. I 
add my appreciation to Carolyn Maloney and Luis Gutierrez for their 
hard work.
  I am reminded of how important this issue is to American society, as 
I was invited to attend a financial literacy roundtable panel on Monday 
evening at the New York Stock Exchange. The panel was sponsored by the 
Hope Literacy Foundation. The panel was moderated by John Hope Bryant. 
I was surrounded by some of the great financial literacy experts in the 
nation. At the roundtable, I discussed the importance of financial 
literacy for college and university students. It is important that 
students be taught financial literacy. The facts about students and 
financial literacy are astounding.
  In 2008, 84 percent of undergraduates had at least one credit card. 
This figure is staggering. Young people who themselves might not even 
have a job are able to get credit cards. This is astounding because it 
begins the cycle of indebtedness.
  Recent studies have indicated that young people do not even know 
basic financial topics such as the impact of student loans on one's 
credit, how to balance a checkbook, and the impact of automobile loans 
on one's credit.
  Because of my concern that young people are not sufficiently informed 
about financial literacy, I have offered this amendment: To require 
financial literacy counseling for borrowers, and for other purposes.
  This amendment is important because approximately two-thirds of 
students borrow to pay for college according to the Center for Economic 
and Policy Research. Moreover, one in ten of student borrowers have 
loans more than $35,000. Passing this legislation will ensure that our 
nation's college students will be more prepared when incurring student 
loan debt and help them to avoid default as student loans severely 
impact one's credit score. Currently there is about $60 billion in 
defaulted student loan debt.
  Many students do not understand the reality of repaying student debt 
while taking out these loans. While most Americans have debt of some 
kind, student loan repayment is especially scary, as one cannot just 
declare bankruptcy and have their loans discharged. Due to the lack of 
financial literacy counseling for borrowers, student loan payments are 
often higher than expected. Recent grads are unable to afford the 
monthly payments resulting in them living paycheck to paycheck, 
acquiring credit card debt and in extreme cases, grads leaving the 
country in order to avoid repayment and debt collectors.
  Students and parents are not currently receiving the proper or any 
information of the burden that their student loans will have once they 
graduate. This is possibly a result of the relationship between student 
loan companies and universities, as some lenders offer universities 
incentives to steer borrowers their way.
  College campuses are one place that young Americans are introduced to 
credit and the possibility of living beyond their means. With proper 
loan and credit counseling the burden of debt incurred in college could 
be greatly reduced. Especially in this time of recession, financial 
literacy is one of the most important tools that we can give to our 
students in order to ensure their success in the future.

  This amendment will provide financial literacy training to students 
taking out Federal Student Loans and will require a minimum of 4 hours 
of counseling including entrance and exit counseling. Counseling will 
include the fundamentals of basic checking and savings accounts, 
budgeting, types of credit and their appropriate uses, the different 
forms of student financial aid, repayment options, credit scores and 
ratings, as well as investing.
  I support the rule and urge my colleagues to do likewise.
  The rule prevents card companies from unfairly increasing interest 
rates on existing card balances--retroactive increases are permitted 
only if a cardholder is more than 30 days late, if a promotional rate 
expires, if the rate adjusts as part of a variable rate, or if the 
cardholder fails to comply with a workout agreement.
  The rule requires card companies to give 45 days notice of all 
interest rate increases or significant contract changes (e.g. fees).
  Requires companies to let consumers set their own fixed credit limit 
that cannot be exceeded.
  Prevents companies from charging ``over-the-limit'' fees when a 
cardholder has set a limit, or when a preauthorized credit ``hold'' 
pushes a consumer over their limit.
  Limits (to 3) the number of over-the-limit fees companies can charge 
for the same transaction--some issuers now charge virtually unlimited 
fees for a single violation.
  Ends unfair ``double cycle'' billing--card companies couldn't charge 
interest on debt consumers have already paid on time.
  If a cardholder pays on time and in full, the bill prevents card 
companies from piling additional fees on balances consisting solely of 
left-over interest.
  Prohibits card companies from charging a fee when customers pay their 
bill.
  Many companies credit payments to a cardholder's lowest interest rate 
balances first, making it impossible for the consumer to pay off high-
rate debt. The bill bans this practice, requiring payments made in 
excess of the minimum to be allocated proportionally or to the balance 
with the highest interest rate. Protects Cardholders from Due Date 
Gimmicks.
  Requires card companies to mail billing statements 21 calendar days 
before the due date (up from the current 14 days), and to credit as 
``on time'' payments made before 5 p.m. local time on the due date.
  Extends the due date to next business day for mailed payments when 
the due date falls on a day a card company does not accept or receive 
mail (i.e. Sundays and holidays).
  Establishes standard definitions of terms like ``fixed rate'' and 
``prime rate'' so companies can't mislead or deceive consumers in 
marketing and advertising.
  Gives consumers who are pre-approved for a card the right to reject 
that card prior to activation without negatively affecting their credit 
scores.
  Prohibits issuers of subprime cards (where total yearly fixed fees 
exceed 25 percent of the credit limit) from charging those fees to the 
card itself. These cards are generally targeted to low-income consumers 
with weak credit histories.
  Prohibits card companies from knowingly issuing cards to individuals 
under 18 who are not emancipated.
  Requires reports to Congress by the Federal Reserve on credit card 
industry practices to enhance congressional oversight.
  Requires card companies to send out 45-day notice of interest rate 
increases 90 days after the bill is signed into law; the remainder of 
the bill takes effect 12 months after enactment.
  I urge my colleagues to support the rule. Seventeen amendments were 
made in order. I will discuss my views on each below.
  1. Gutierrez Amendment. This amendment offered by Representative 
Gutierrez, would allow issuers to charge consumers for expedited 
payments by telephone when consumers request such an expedited payment, 
and would make technical corrections; would require that all credit 
card offers notify prospective applicants that excessive credit 
applications can adversely affect their credit rating; would direct the 
Board of Governors of the Federal Reserve to suggest appropriate 
guidelines for creditors to supply cardholders with information 
regarding the availability of legitimate and accredited credit 
counseling services; would require all written information, provisions, 
and terms in or on any application, solicitation, contract, or 
agreement for any credit card account under an open end consumer credit 
to appear in no less than 12 point font; and would require that stores 
who are self-issuers of credit cards display a large visible sign at 
counters with the same information that is required to be disclosed on 
the application itself.
  I support this amendment and I urge my colleagues to support this 
amendment. This amendment addresses the issue of financial literacy and 
ensures that the consumer is afforded information to make an informed 
decision about applying for and ultimately securing a credit card. 
Credit counseling is a key element and is of paramount importance. This 
amendment provides credit counseling to the consumer before the 
consumer gets into financial trouble.

[[Page H5010]]

  2. Frank (MA), would require the Federal Reserve (1) to review the 
consumer credit card market, including through solicitation of public 
comment, and report to Congress every two years; (2) publish a summary 
of this review in the Federal Register, along with proposed regulatory 
changes (or an explanation for why no such changes are proposed). The 
amendment also requires the Federal banking agencies and the FTC to 
submit to the Federal Reserve, for inclusion in the Federal Reserve's 
annual report to Congress, information about the agencies' supervisory 
and enforcement activities related to credit card issuers' compliance 
with consumer protection laws.
  I support this amendment and encourage my colleagues to support this 
amendment. This amendment ensures that the FTC and the Federal banking 
agencies are engaging in supervisory and enforcement activities related 
to credit card issuer's compliance with consumer protection laws. This 
is important to ensure that another credit crisis is not looming and is 
an appropriate step to take to prevent such crises from occurring in 
the future.
   3. Slaughter (NY)/Duncan (TN)/Hastings, Alcee (FL)/Johnson (GA)/
Christensen (VI), would set underwriting standards for students' credit 
cards, including limiting credit lines to the greater of 20 percent of 
a student's annual income or $500, without a co-signer and requiring 
creditors to obtain a proof of income, income history, and credit 
history from college students before approving credit applications.
  I support this amendment. During the 1990s and 2000s, credit 
companies began a massive campaign of inundating university students 
with credit card offers. Such advertisement and easy availability of 
credit to students had the effect of enticing students to apply for 
credit. The students would then become indebted and subsequently face 
economic hardship. This amendment would help ensure that a student 
would be qualified for credit that he or she could afford. This 
amendment is practical and it makes sense. I support it and I urge my 
colleagues to do the same.
  4. Gutierrez (IL)/Peters, Gary (MI)/Edwards, Donna (MD), would 
require credit card issuers to allocate payments in excess of the 
minimum payment to the portion of the remaining balance with the 
highest outstanding APR first, and then to any remaining balances in 
descending order, eliminating the pro rata option.
  I support this amendment. The inclusion of this amendment would inure 
to consumers. I support it and urge my colleagues to do the same.
  5. Pingree, Chellie (ME), would require the Chair of the Federal 
Reserve to submit a report on the level of implementation of this bill 
every 90 days until the Chair can report full industry implementation.

  I support this amendment and urge my colleagues to do the same.
  6. Polis (CO), would clarify that minors are allowed to have a credit 
card in their name on their parent or legal guardian's account.
  I support this amendment. I believe that if young people are afforded 
credit cards and are taught how to effectively and safely use credit 
that it can be beneficial to them. This amendment would help in making 
children more financially responsible.
  7. Jones (NC), would require the Federal Reserve Board, in 
consultation with the Federal Trade Commission and other agencies, to 
establish regulations that would allow estate administrators to resolve 
outstanding credit balances in a timely manner.
  I support this amendment. Its inclusion would ensure that debts are 
not passed off to the state. I support this bill and urge my colleagues 
to support.
  8. Maloney (NY)/Watson (CA), would require credit cardholders to opt-
into receiving over-the-limit protection on their credit card in order 
for a credit card company to charge an over-the-limit fee. Allows for 
transactions that go over the limit to be completed for operational 
reasons as long as they are of a de minimis amount, but the credit card 
company is not allowed to charge a fee.
  I support this amendment. This is the same principle that applies 
with respect to over the limit fees in banking accounts. The premise is 
reasonable and makes sense. I urge my colleagues to support it.
  9. Hensarling (TX), would allow issuers to raise rates on existing 
balances if they provide consumers clear notification 90 days in 
advance, provided that the issuer has previously specified this ability 
to consumers in their contract and at least once every year thereafter.
  I do not support this amendment. The whole idea behind this bill is 
to extend certain rights to the consumer. This amendment allows credit 
card companies to continue to raise rates without any regard as to 
whether the rates were reasonable in the first instance. I urge my 
colleagues not to support this amendment.
  10. Hensarling (TX), would allow creditors to use retroactive rate 
increases, universal default, and `double cycle billing' practices as 
long as they offer at least one card option that does not have those 
billing features to all of their existing customers.
  I do not support this amendment. The whole idea behind this bill is 
to extend certain rights to the consumer. This amendment allows credit 
card companies to continue to raise rates without any regard as to 
whether the rates were reasonable in the first instance. I urge my 
colleagues not to support this amendment.
  11. Minnick (ID), would provide that the amount of a balance as of 
the 7-day mark, instead of the 14-day mark, following a notice of a 
rate increase would be protected from the rate increase.
  I do not support this amendment. Allowing the balance as of the 14-
day mark following a notice of rate increase that would be protected 
would help the consumer. I urge my colleagues not to support this 
amendment.
  12. Price, David (NC)/Miller, Brad (NC)/Moran, James (VA)/Quigley 
(IL)/Lowey (NY)/Stupak (MI)/Sutton (OH), would require credit card 
issuers to provide enhanced disclosure to consumers regarding minimum 
payments, including a written Minimum Payment Warning statement on all 
monthly statements as well as information regarding the monthly payment 
amount and total cost that would be required for the consumer to 
eliminate the outstanding balance in 12, 24 and 36 months. Would 
require credit card issuers to provide a toll-free telephone number at 
which the consumer may receive information about accessing credit 
counseling and debt management services.

  I support this amendment. It makes good sense and would help the 
consumer make informed decisions. It affords the consumer with credit 
counseling and debt management services which can be vital 
informational tools for consumers.
   13. Davis, Susan (CA)/Carney (PA), Would require card issuers to 
notify cardholders 30 days before closing their accounts, the reason 
for the account closure, options to keep the account open, programs 
available to repay the balance, and the resulting impact on their 
credit score.
  I support this amendment and urge my colleagues to support it. This 
amendment offers the consumer the last clear chance to self-help and to 
fix the consumers bad credit situation. Should the consumer not be able 
to improve the situation, the consumer must be informed about the 
resulting impact upon the consumer's credit score. This amendment makes 
sense. I urge my colleagues to support it.
  14. Perriello (VA), Would require a 6-month period for a promotional 
rate for credit cards before the standard rate may be increased.
  I support this amendment.
  15. Schauer (MI), Would require creditors to post their credit card 
written agreements on their Web sites, and requires the Board to 
compile and report those agreements on its Web site.
  I support this amendment. It promotes transparency.
  16. Teague, Harry (NM)/Nye (VA)/Boccieri (OH)/Kissell, Larry (NC), 
Would restrict credit card issuers from making adverse reports to 
credit rating agencies regarding deployed military service members and 
disabled veterans during the first two years of their disability.
  I support this amendment and I encourage my colleagues to do the 
same. This amendment ensures that veterans and servicemen are not 
prejudiced in their credit ratings because of deployment or disability. 
It is a small sacrifice for our servicemen and veterans who have given 
so much to protect this country. I urge my colleagues to support this 
amendment.
  17. Schock (IL), Would allow consumers who have not activated an 
issued credit card within 45 days, to contact the issuing institution 
to cancel the card and have it removed from their credit report 
entirely. If after 45 days the card has not been activated it is 
automatically removed from any such report.
  I support this amendment. It is a good commonsense amendment. I urge 
my colleagues to support it.
  Madam Speaker, I support the rule and the amendments that I 
enumerated above. I urge my colleagues to do the same.
  Mr. PERLMUTTER. Madam Speaker, I would like to yield 2 minutes to my 
friend from Massachusetts (Mr. Tierney).
  Mr. TIERNEY. I thank the Member for yielding me the time.
  I want to congratulate the sponsors of this bill, the Credit 
Cardholders' Bill of Rights. Obviously, we have been proud to sponsor 
this bill and its previous iterations in past Congresses as well as 
this Congress.
  People in my district are upset about what's been going on with this. 
A Gloucester, Massachusetts, resident says that his bank has raised 
rates to the 27 percent level. Now they have to use part of their 
retirement savings to pay off their cards. From North Andover, 
Massachusetts, rates going up as high from 12 percent to 29 percent. A 
12-year customer of their bank never

[[Page H5011]]

late on a payment. Salem, Massachusetts, their interest rates were 
threatened to go up to 31.99 percent.
  Cardholders need protection. They need protection against arbitrary 
interest rate increases. They need protection against being punished 
even when they pay on time. They need protection against due-date 
gimmicks. They need protection against excessive fees.
  But we also take nothing from the underlying bill, which is a good 
piece of legislation, to say that we also need protection on interest 
rates, period. Usury has been with this country since its origination 
all the way through the end of the Carter years. It wasn't until the 
courts in 1978 indicated that companies should not have to deal with 50 
different interest rates State by State. But Justice Black also said 
the Federal legislators could undertake to set a cap on interest rate 
fees, and we should have been doing that long ago. We should have taken 
this opportunity in this rule to allow an amendment to do just that. 
We've had usury rules since the Babylonian Empire. The fact of the 
matter is these credit card companies will go out and just raise those 
interest rates to try to make up on what they're losing and the other 
things that we're doing in this bill.
  If we don't do it in this bill, we should do it soon in a 
freestanding bill to stop those usury rates. We have to find out 
whether the Members of this body and the Senate are standing with 
American families and businesses or whether they're going to stand with 
the companies as they take excessive profits and unjustly enrich 
themselves on the backs of our families and our neighbors.
  So I want to thank you for the time and say this is a great bill. The 
rule is a good rule. We need to move forward, however. If we're not 
going to allow a cap on interest rates in this bill, then we ought to 
do it in a freestanding bill and do it as soon as possible.

                              {time}  1100

  Mr. PERLMUTTER. I would like to ask my friend from Texas, we have two 
more speakers, proceed with them and then close? I don't know how many 
speakers he may have.
  Mr. SESSIONS. I appreciate the gentleman, and I would allow him to 
proceed as just discussed.
  Mr. PERLMUTTER. I yield 1 minute to my friend from Tennessee (Mr. 
Cohen).
  Mr. COHEN. Madam Speaker, this is one of the most important bills to 
come before the Congress. I hope it has bipartisan support, because, 
indeed, people of all income ranges have credit card debt. And the 
actions of the credit card companies in changing due dates and other 
features hurt everybody. This is crippling Americans, consumers, with 
interest, debt and fees.
  We had a committee meeting--I am chairman of Commercial and 
Administrative Law--on this subject. The credit card industry told us 
they couldn't change their computers quicker than 2 years to get ready 
to do such a bill. I would submit if we can put a man on the Moon, the 
banks can get their computers fixed to deal with this bill, and they 
should.
  We had an amendment we offered in committee on college students. 
College students are most vulnerable and shouldn't be lured to credit 
cards at an early age and put into even more debt than student loans do 
by offering prizes and gifts.
  I support the bill and hope we can go further in the future or with 
the Senate.
  Mr. PERLMUTTER. I would like to yield 2 minutes to the gentleman from 
New York (Mr. Maffei).
  Mr. MAFFEI. I thank the gentleman for yielding.
  Madam Speaker, we must support this rule because the Credit 
Cardholders' Bill of Rights Act is really just the beginning, just the 
foundation of reestablishing basic rules that will protect consumers.
  A lot of these amendments are very, very good amendments and are 
needed to make sure that we don't need a lawyer like we do when we buy 
a house, you have a lawyer. But we don't need a lawyer in order to just 
get a credit card.
  The very nature of what credit card companies have been doing has 
become exploitive. They are going after Americans who may be too 
responsible to run away, but too poor to ever pay back their balance.
  They are making their money on unreasonable interest rates, fees, et 
cetera. And during a recession, this only becomes worse.
  Now, the other side is saying that there is competition. But how can 
consumers take advantage of this competition if they can't even tell 
which credit card is better because of all the deceptive practices that 
we are allowing? Thirty-page contracts containing all this fine print, 
raising interest rates, universal default which says if you are late on 
any card, then any other card can punish you.
  This credit card bill of rights is really just the beginning, and we 
must make sure that we also have a declaration of independence from 
unreasonable credit card interest rate and debt. Just as I just did 
with my credit card, we must get away from these unreasonable rates and 
unreasonable fees that the credit card companies are offering.
  This bill will give the consumers the tools to do that.
  Mr. SESSIONS. Madam Speaker, the gentleman and I had previously 
spoken that I would have a late arrival.
  I yield 5 minutes to the gentleman from Illinois (Mr. Roskam).
  Mr. ROSKAM. I thank the gentleman for yielding.
  I offered an amendment before the Rules Committee, and unfortunately, 
it was sort of swatted away in a partisan fashion. I really regret 
that.
  I think that the tone that we hear many times coming from the 
leadership of this Congress is there is no pride of authorship, there 
is willingness to listen, and yet, somehow the conduct and the 
procedure that we have seen coming from the Rules Committee has really 
fallen short of that soaring rhetoric. Let me give you an example of 
that.
  I offered an amendment which was very straightforward, and it 
directed the GAO to make sure that the requirements of this bill would 
not restrict access to credit or increase the cost of credit for small 
business.
  And all it does is it would have delayed the effective date of the 
legislation until the President determined that the GAO study concluded 
that there was no extra burden for small business. And if the President 
differed in his determination, all he had to do was justify it.
  So this isn't a power grab, this isn't overstating or overstepping, 
but what it is saying is, look, we all cumulatively talk about how 
important small business is. Everybody, when we go back to our 
districts, when we go to our teletown hall meetings, when we talk to 
the chambers of commerce and the rotary clubs, everybody talks about 
how important small business is.
  And, yet, there is a very real possibility that the underlying bill 
that the majority is advancing right now is going to have an adverse 
effect on credit availability for small business.
  Now, we have heard, during the course of this national economic 
debate and conversation that we have had, that we hold in highest 
esteem the following groups. We say we are very concerned about the 
small businessperson. We are very concerned about the entrepreneur. We 
are very concerned about the self-employed.
  And, yet, when an opportunity comes along to stand up for that very 
group and basically say, whoa, hold on, just a second here, let's be 
very, very careful when we are changing credit policy that everybody 
acknowledges is the life and blood of a small business, yet, suddenly, 
we are just quickly going to run roughshod over that group, when all we 
are doing is saying let us have a vote on an amendment?
  This isn't ramming something down; just have the vote. Just let the 
people's House decide.
  But yet the Rules Committee, Madam Speaker, was very, very dismissive 
of it and said, no, no, no, we are really not interested in that 
approach, and we don't even want to hear about it. I think that's 
regrettable.
  I think that this House can do better. I think this rule can be much 
better than this. What's to be afraid of? What's to be afraid about a 
vote and a conversation in the people's House, on the floor of the 
people's House about standing up for small business.
  Now, I know that there are other elements of the bill that claim to 
be helpful to small business. But I will tell

[[Page H5012]]

you what, when it comes down to it, if we are that cavalier that we are 
not willing to have a conversation and a vote, a recorded vote on an 
amendment that simply says we are going to put a pause button on this 
to make sure that the GAO looks at this, to make sure it doesn't have 
an adverse effect on small business, I think it's deeply regrettable.
  And notwithstanding the soaring rhetoric that we hear coming from the 
leadership of the majority, Madam Speaker, notwithstanding the 
promises, notwithstanding the sort of bumper-sticker mentality that you 
hear, see out and about in this town, I think it's really regrettable. 
Here we have this opportunity to stand up for small business, to make 
sure that they are treated well, and that they are treated with respect 
and that they have access to the credit that they need.
  I think we can do much better. I am, therefore, urging people to vote 
against the rule.
  Mr. PERLMUTTER. I yield myself so much time as I may consume.
  But before the gentleman leaves the Chamber, my friend from Illinois, 
I want him to know, Madam Speaker, that there are 17 amendments up for 
vote today. And among those is a vote involving the Federal Reserve and 
reports that Federal Reserve will give to this Congress as to the 
consequences of the actions that we take within this legislation.
  Now, if his complaint is that it should be the GAO versus the Federal 
Reserve, maybe that's a legitimate complaint. I certainly don't think 
it is.
  But we are allowing today 17 amendments to the Credit Cardholders' 
Bill of Rights, and they cover a whole range of issues.
  Mr. ROSKAM. Will the gentleman yield?
  Mr. PERLMUTTER. I yield 15 seconds to my friend from Chicago.
  Mr. ROSKAM. I want to thank the gentleman very much, Madam Speaker, 
for yielding to me.
  When the gentleman uses language like allowing, we are allowing a 
debate, we are allowing certain amendments, I think we can do better 
than that. Look, 52 amendments were submitted.
  That means, do the quick math, that's a whole host of ideas that were 
just sort of cast aside. We can do better, 17 out of 52. We know we can 
do better than that.
  Let's vote against this rule and come back and do it the right way.
  Mr. PERLMUTTER. I thank the gentleman.
  I reserve the balance of my time.
  Mr. SESSIONS. Madam Speaker, in closing I would like to stress that 
while my friends on the other side of the aisle claim to be protecting 
consumers with this legislation, they have refused a bill, the 
opportunity for an amendment in this bill, that would protect all 
taxpayers from de facto nationalization of our financial system. The 
American taxpayers deserve the same accountability and transparencies 
with their dollars that this bill claims to do for consumers.
  As a Nation, we have real problems, Madam Speaker, and they need to 
be solved through real solutions. And passing legislation that already 
exists in Federal statute, I believe, is wasting our time.
  We need to provide jobs, we need to encourage economic growth, we 
need to get the investor back into the game and, perhaps most of all, 
we need to restore America's public faith in their Members of Congress 
and in this Congress that we are aiming at solving the problems that 
face this Nation.
  While I encourage each of my colleagues to vote ``no'' on this 
structured rule, I would also advise them they need to equally 
understand the facts of the case, and that would drive them to a ``no'' 
vote.
  I yield back the balance of my time.
  Mr. PERLMUTTER. Madam Speaker, I appreciated the debate on this 
particular rule, but it is time, this is not a time to just vote 
``no.'' We like the status quo.
  The people across this country are fed up with some of the practices 
that have existed with respect to credit cards. Whether it's universal 
default, all of a sudden your credit card rate is raised because you 
blinked wrong at a school crossing.
  Under this, under universal default, you can have your credit card 
rate raised for any reason at any time. That's just not right.
  Doubling billing cycle, you pay a portion of your bill, yet you are 
still charged interest on that portion the next go around. That's not 
right.
  Credit cards are being extended to young people with tons of legalese 
that are incomprehensible to the greatest of the lawyers. That's not 
right.
  It is time that the people of this country take control of their 
credit cards and the practices that have existed so that it isn't just 
a profit center for many of the credit card companies. The good credit 
card companies and the good banks really do respect the rights of their 
customers and their consumers.
  But there are abusive practices that must be stopped, and it is H.R. 
627 that will rein in some of these abusive practices.
  At this point I would urge a ``yes'' vote on the rule and on the 
previous question.
  Madam Speaker, I yield back the balance of my time, and I move the 
previous question on the resolution.
  The previous question was ordered.
  The SPEAKER pro tempore. The question is on the resolution.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. SESSIONS. Madam Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this question will be postponed.

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