[Congressional Record (Bound Edition), Volume 155 (2009), Part 18]
[House]
[Pages 24682-24684]
[From the U.S. Government Publishing Office, www.gpo.gov]




             CREDIT CARD TECHNICAL CORRECTIONS ACT OF 2009

  Mr. FRANK of Massachusetts. Mr. Speaker, I move to suspend the rules 
and pass the bill (H.R. 3606) to amend the Truth in Lending Act to make 
a technical correction to an amendment made by the Credit CARD Act of 
2009.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 3606

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Credit CARD Technical 
     Corrections Act of 2009''.

     SEC. 2. TECHNICAL CORRECTION.

       Section 163(a) of the Truth in Lending Act (U.S.C. 
     1666b(a)), as amended by section 106(b) of the Credit Card 
     Accountability Responsibility and Disclosure Act of 2009, is 
     amended by inserting ``a credit card account under'' after 
     ``payment on''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Massachusetts (Mr. Frank) and the gentleman from New York (Mr. Lee) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Massachusetts.
  Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as 
I may consume. We made an error, Congress did, when we passed the 
credit card bill, not in passing the bill. The only error we made there 
was we didn't make it go into effect immediately because the abusive 
behavior by the credit card companies has been even worse than some 
people have feared, and I hope we will soon be trying to move up that 
effective date. But there was a drafting error in which the 
restrictions applied not just to credit cards if you read the bill 
literally, as you have to, with the bill, but all open-end credit 
agreements. Credit unions in America, which have not been any part of a 
pattern of abuse of credit cards, were inadvertently swept into this.
  The gentleman from Vermont (Mr. Welch) and the gentleman from 
Missouri (Mr. Skelton) called this to the attention of the committee, 
as did the National Credit Union Administration and the Credit Union 
National Association; the latter, of course, being the private 
association of credit unions, the former being the administrative 
agency. They asked us to fix it. They were quite correct.
  Credit unions are a very important part of the structure of this 
country and it serves our consumers. And so this bill would correct 
that error and allow the credit unions to continue to perform their 
function.
  I reserve the balance of my time.
  Mr. LEE of New York. Mr. Speaker, I yield myself such time as I may 
consume.
  I rise today in support of H.R. 3606, the Credit CARD Technical 
Corrections Act of 2009, and appreciate my friend from Vermont (Mr. 
Welch) for his leadership in bringing this important measure to the 
floor.
  Earlier this year, Congress enacted the Credit Card Accountability, 
Responsibility, and Disclosure Act in order to provide consumers with 
more transparency regarding their credit card accounts and protect them 
from potential predatory practices, including unwarranted rate 
increases on existing balances and short-cycle billing. One important 
provision of this new law required that financial institutions deliver 
credit card statements to customers no later than 21 days before the 
payment due date.
  Unfortunately, between the time when the House passed the CARD Act 
and when it was signed into law, a change was made to suggest that this 
new requirement should be applied to all open-ended loan accounts, 
including home equity lines of credit, rather than just to credit card 
accounts.
  This is especially problematic for credit unions who offer their 
members monthly consolidated statements covering all loan accounts, the 
flexibility of determining their payment dates, and the convenience of 
payroll deductions. Because these services will in many cases violate 
the new 21-day rule, financial institutions will be forced to 
discontinue these important benefits to customers.
  In addition, if left as-is, the resources needed to comply with these 
new rules will no doubt force institutions to pass on increased costs 
to consumers through higher loan fees and interest rates and not to 
mention the confusion many will face, all from a law that was intended 
originally for their benefit. This is clearly an unintended consequence 
that needs to be rectified immediately. The legislation before us right 
now will correct this and ensure that credit unions and community banks 
can continue to offer quality service to their members and customers.
  As a cosponsor of this important change which will simply ensure that 
the 21-day requirement only applies to credit card accounts, I urge 
immediate passage of H.R. 3606.
  I reserve the balance of my time.
  Mr. FRANK of Massachusetts. I yield 4 minutes to the gentleman from 
Vermont, the lead author of this bill, Mr. Welch.
  Mr. WELCH. I thank the gentleman from Massachusetts (Mr. Frank) and 
my colleague. I thank the gentleman from New York (Mr. Lee) and Mr. 
Skelton.
  You know, Mr. Speaker, one of the things the American people have a 
right to expect of us in Congress is that when we pass legislation, we 
step back after its passage and listen to the people affected by it to 
see if there are some mistakes that we made that need correction, and 
in this case, there is a mistake. Mr. Lee just outlined what it is and 
the chairman did the same.
  I think a number of us, including Mr. Skelton, when we were home, 
heard from our credit card companies as to the over-inclusive nature of 
the legislation that would adversely affect the good work that they're 
doing. The CARD Act, as you know, had a number of very good provisions, 
including the 21-day notice requirement. That's intended to make sure 
that financial institutions give individuals enough time to pay a bill, 
and it established a minimum level of fairness. But for credit unions 
and their members, this change would actually have made things more 
difficult.
  Credit unions use consolidated statements, so home loans, auto loans, 
savings accounts, checking accounts, and credit card bills are all in 
one package, and that's for the convenience of the consumer, not to 
create confusion for the consumer. This is the model, in fact, of how 
the system should work. It's straightforward and transparent.
  The 21-day notice requirement would have had an unintended impact of 
requiring credit unions to split up those consolidated statements and 
transform transparency into confusion. This wouldn't help consumers 
and, obviously, wouldn't add to transparency. So the bill that has the 
support of Mr. Skelton and Mr. Lee and myself would clarify the 
intention of the CARD Act and allow credit unions to continue the very 
commonsense and, I think, consumer-friendly approach of sending their 
customers a single statement every month.
  Mr. LEE of New York. Mr. Speaker, I have no further requests for time 
and yield back the balance of my time.

[[Page 24683]]




                             General Leave

  Mr. FRANK of Massachusetts. Mr. Speaker, first I would ask unanimous 
consent that all Members have 5 legislative days in which to revise and 
extend their remarks and submit extraneous material both on this bill, 
H.R. 3606, and the preceding bill, H.R. 1327.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Massachusetts?
  There was no objection.
  Mr. FRANK of Massachusetts. Finally, Mr. Speaker, this has been well-
covered by the two Members, the gentleman from Vermont (Mr. Welch) and 
the gentleman from New York (Mr. Lee), who have been major movers in 
it. I would just ask, although we have general leave, I would note that 
I am inserting in the Record a letter from the National Credit Union 
Administration, a letter from the Credit Union National Association, 
both asking for this, and then two documents which I hope will give 
people some sense of how this institution works at its best.

                            Credit Union National Association,

                                  Washington, DC, October 7, 2009.
     Hon. Barney Frank,
     Chairman, Committee on Financial Services, U.S. House of 
         Representatives, Washington, DC.
     Hon. Spencer Bachus,
     Ranking Member, Committee on Financial Services, U.S. House 
         of Representatives, Washington, DC.
       Dear Chairman Frank and Ranking Member Bachus: On behalf of 
     the Credit Union National Association (CUNA), I am writing 
     regarding a specific issue that credit unions are 
     experiencing with respect to the recently-enacted Credit Card 
     Accountability, Responsibility and Disclosure (CARD) Act. 
     CUNA is the nation's largest credit union advocacy 
     organization, representing approximately 90% of America's 
     8,000 state and federal credit unions and their 92 million 
     members.
       Credit unions are currently reeling from an unintended 
     consequence of the CARD Act. Section 106 of the CARD Act 
     prohibits creditors from treating payments as being late 
     unless the creditor adopts reasonable procedures to ensure 
     that periodic statements are mailed or delivered to the 
     consumer no later than 21 days before the payment due date. 
     We believe this provision was intended to cover only credit 
     card accounts; however, the provision, as enacted, applies to 
     all open-end loans, including general lines of credit, lines 
     of credit associated with share draft and checking accounts, 
     signature loans, and home equity lines of credit (HELOCs) as 
     well as multi-featured, open-end lending programs.


  Consolidated Billing May Cease, Increasing Costs for Credit Unions 
                                Members

       Most credit unions provide monthly consolidated membership 
     statements that combine information on a member's savings, 
     checking, and loan accounts, other than for credit cards. 
     Since these statements may include a number of open-end 
     credit plans with different due dates, changing these due 
     dates to comply with the 21-day requirement may lead credit 
     unions to discontinue the use of consolidated statements or 
     send statements for each loan in addition to the consolidated 
     one.
       The alternative is to send separate statements for each 
     loan. This will greatly increase both processing and mailing 
     costs (in addition to the environmental impact), which credit 
     unions have estimated will be $1-$2.25 per month per loan. 
     Notwithstanding the additional costs, we are also very 
     concerned that some credit unions currently do not have the 
     capacity to print and mail these increased number of 
     statements in order to meet the rule's timing requirements. 
     Not only will credit unions need to pass on these costs to 
     their members in the form of higher loan rates, lower deposit 
     rates, or higher fees elsewhere, but credit union members 
     will be very confused and concerned when they receive 
     multiple statements from their credit union, depending on how 
     many loans they have outstanding. Credit union relationships 
     with their members will suffer, all in an effort to comply 
     with an unintended application of a law that is intended to 
     benefit consumers.


Credit Union Members May No Longer Be Able to Choose Their Payment Date

       For certain loans, particularly vehicle loans, credit union 
     members are often permitted to choose the due date to best 
     suit their financial needs; for example, members may choose 
     due dates that coincide with pay days or to avoid other 
     payment due dates. This practice will have to be discontinued 
     if the member-chosen date no longer complies with the new 21-
     day requirement. Changing the express choice by members would 
     not be consumer-friendly, and members will not understand 
     that a Federal law requires this action.
       Additionally, many credit unions provide their members with 
     the convenience of automated payments, in which payments are 
     automatically withdrawn from the credit union account on a 
     certain date. Again, this may often be chosen by the member, 
     who may choose a date that is related to when he or she 
     receives a paycheck. This may now need to be changed based on 
     the new 21-day requirement, imposing hardship and 
     inconvenience if the new date no longer coincides with the 
     receipt of a paycheck.


               Bi-Weekly Payments Are No Longer Permitted

       Many loans are structured so that payments are made bi-
     weekly, which serve to minimize the amount of interest that 
     is charged, as compared to loans in which payments are made 
     monthly. These loans are often repaid through payroll 
     deduction. If bi-weekly programs are no longer permitted 
     under the new 21-day requirement, the result will be that 
     these members will pay additional interest and may no longer 
     have the benefit and convenience of payroll deduction.


               HELOC Terms and Conditions Must Be Changed

       The 21-day requirement will also apply to HELOCs, the terms 
     of which cannot be easily changed. Regulation Z lists 
     exceptions for changing terms of HELOCs and although the 
     Regulation Z commentary permits changing the due date, we 
     note that the due date is often a contractual term, which 
     adds to the difficulty of complying with these new 
     requirements.


          A Technical Correction is Necessary and Appropriate

       To address these concerns, Representative Peter Welch (D-
     VT) has introduced legislation, H.R. 3606, the CARD Act 
     Technical Corrections Act. This legislation very simply 
     inserts the words, ``a credit card account under'' to Section 
     106 of the CARD Act. These words were included in the House-
     passed version of the CARD Act, and we believe the effect of 
     their omission in the enacted version of the legislation was 
     unintended. We hope the Committee will agree that a technical 
     correction is appropriate and will support passage of 
     technical corrections legislation as quickly as possibly.
       On behalf of America's credit unions, thank you very much 
     for your consideration.
       Sincerely,
                                                   Daniel A. Mica,
     President & CEO.
                                  ____

                                             National Credit Union


                                               Administration,

                               Alexandria, VA, September 22, 2009.
     Hon. Barney Frank,
     Chairman, House Committee on Financial Services, Rayburn 
         House Office Building, Washington, DC.
       Dear Chairman Frank: I appreciate the opportunity to offer 
     comments to you and your staff regarding credit union 
     industry concerns about the Credit Card Accountability 
     Responsibility and Disclosure Act of 2009 (Credit CARD Act). 
     More specifically, industry leaders tell me that the 21-day 
     statement requirement (12 CFR 226.5(b)(2)(ii)) has resulted 
     in unintended consequences and is proving burdensome for 
     credit unions, and their service providers, regarding non-
     credit card open-end lending.
       Historically, credit unions have worked closely with 
     individual members to create loan repayment plans that are 
     most beneficial to that member. For example, a member could 
     elect to establish multiple payments within a month instead 
     of one monthly payment. Generally, members use this type of 
     payment arrangement to match their payroll distribution and 
     to reduce their overall loan interest costs. I am advised 
     that such arrangements will be difficult to continue given 
     the 21-day statement requirement.
       These leaders have also brought to my attention the 
     increasing costs associated with modifying their processing 
     systems to reach compliance with the Credit CARD Act and the 
     Federal Reserve's interim final rule implementing the Credit 
     CARD Act requirements. These additional costs will most 
     likely be borne by the credit union members, a difficult 
     burden which seems to conflict with the intent of the 
     statute.
       ``Member choice'' payment dates provide members with 
     maximum flexibility in managing their finances. It is my hope 
     that this option will continue unhindered. I am available for 
     discussions with you and your staff to ensure that member 
     service is not adversely impacted by unintended consequences 
     of the Credit CARD Act. I also look forward to discussions on 
     how member protections can be enhanced without imposing 
     unnecessary costs and burden to credit unions or their 
     members.
       Thank you for any consideration you can give to this 
     important credit union issue.
           Sincerely,
                                                     Deborah Matz,
                                                         Chairman.

                              {time}  1600

  On August 27, the Missouri Credit Union Association wrote to our 
colleague from Missouri (Mr. Skelton) to urge him to act on this.
  Today, about a month and a half later, I have the privilege of 
introducing into the Record the remarks

[[Page 24684]]

from Mr. Skelton in favor of this bill. Mr. Skelton had to go off to a 
previous engagement.
  So we have the Missouri Credit Union Association. And, Mr. Speaker, I 
know that is an organization that you work with as well. On August 27, 
they brought a problem to the attention to their Member of Congress, 
and a month and a half later he has the ability to talk about how we 
are resolving it. It also was, I think, a similar process with the 
gentleman from New York and the gentleman from Vermont.
  So this is an example of how, in a bipartisan way, when we hear from 
responsible people in the community about things that need to be done 
that could be done quickly, we could do them.
  Mr. SKELTON. Mr. Speaker, during the August District Work Period, I 
traveled extensively throughout Missouri's Fourth Congressional 
district, meeting with residents who were eager to share their views on 
a variety of Federal matters. In separate visits with Missouri credit 
union officials and small town Missouri bankers, the state of the 
economy and Congress' efforts to make financial services more 
responsive to every day citizens were top priorities for discussion.
  Earlier this year, Congress passed and the President signed into law 
the Credit Card Accountability, Responsibility, and Disclosure Act, 
bipartisan legislation to make credit card agreements more customer 
friendly. I supported this measure and am pleased it has become the law 
of the land.
  But, when I met with credit union officials in August, they brought 
to my attention a technical error in the law that is making it 
difficult for them to provide lines of credit to some of their members.
  When I returned to Washington in September, I immediately brought the 
credit unions' concerns to the attention of Financial Services 
Committee Chairman Barney Frank. And, at the same time, my colleague 
from Vermont, Congressman Peter Welch, drafted responsible 
legislation--which we are considering here in the House today--to 
correct this technical error so that credit unions can continue 
offering open-end credit plans that are popular with many of their 
members.
  Chairman Frank, Mr. Welch, and their staffs have worked diligently to 
fix this problem for America's credit unions. I am pleased that they 
have moved this bill so quickly through the legislative process. I urge 
my colleagues to support Mr. Welch's legislation and hope the other 
body will act to pass it soon.

                            Missouri Credit Union Association,

                                   St. Louis, MO, August 27, 2009.
     Hon. Ike Skelton,
     Rayburn Building,
     Washington, DC.
       Dear Representative Skelton: Thank you for taking time out 
     of your busy schedule to meet with Missouri credit unions 
     this month in the district. As discussed, Missouri credit 
     unions are extremely concerned about unintended consequences 
     created by the Credit Card Accountability, Responsibility and 
     Disclosure (CARD) Act of 2009, and the serious implications 
     for consumers in our state. We are asking for your help and 
     support in a legislative solution.
       Credit unions did not participate in the consumer abuses 
     regarding credit cards that prompted passage of the CARD Act 
     of 2009, and do not have an issue with complying with the 
     provisions of the CARD Act that relate specifically to credit 
     card accounts.
       However, sections of the Act applying to open-end credit 
     plans do affect credit unions and will disadvantage credit 
     union members. Credit unions, working with their members, 
     often set up open-end credit plans because of the flexibility 
     it provides to members in managing their credit and adding 
     future loans.
       It is common for members who live paycheck to paycheck, or 
     have trouble managing their money, to request a payment plan 
     that has funds deducted from their checking account or 
     payroll direct deposit that is credited to their loan. They 
     may choose to have funds credited weekly, every two weeks, or 
     twice a month. The CARD Act requirement that the account 
     holder receive a 21-day notice prior to payment due dates 
     (Sec. 106(b)) becomes problematic for the credit union when 
     the member has requested anything other than monthly 
     payments.
       When payment schedules occur more than monthly, we are not 
     finding a reasonable solution that meets the 21-day notice 
     requirement of the law. Credit unions report to our 
     association that there are significant issues with data 
     processors in complying with the new law. One of Missouri's 
     smaller credit unions with $19 million in assets has 
     approximately 1,800 open-end loans that are not credit card 
     accounts. Making the necessary changes to comply with the Act 
     will mean additional ongoing expense. There would be 
     additional costs for multiple mailings including postage and 
     staff time. If the credit union incurs additional costs to 
     comply with the CARD Act, those increases will be passed on 
     to our member consumers. We are also concerned that it will 
     cause our members considerable confusion if they begin to 
     receive multiple notices every month. Many credit unions will 
     be impacted to the extent that they will have to offer only 
     closed-end loans, which eliminates the convenience and 
     flexibility that members need and prefer.
       If credit unions adjust all open-end credit plans to only 
     allow one payment per month, we have taken options away from 
     consumers that help them better manage their money. We 
     believe that the intent of the CARD Act is to protect 
     consumers and avoid confusing disclosures and abusive 
     practices relative to credit card open-end programs. We do 
     not believe that the intent was to disadvantage members and 
     increase their costs to access open-end programs.
       Section 106(b) is the only place in the Act where the 
     wording ``open end credit'' is used to broadly apply beyond 
     credit card programs. During our meeting, we provided you 
     with suggested language that would correct this 
     inconsistency. It is provided below. The words in italics are 
     currently in the bill. The bold wording in brackets is the 
     suggested replacement.


             SEC. 106. Rules regarding periodic statements.

       (a) In General.--Section 127 of the Truth in Lending Act 
     (15 U.S.C. 1637) is amended by adding at the end the 
     following:
       (o) Due Dates for Credit Card Accounts--
       (1) In general.--The payment due date for a credit card 
     account under an open end consumer credit plan shall be the 
     same day each month.
       (2) Weekend or holiday due dates.--If the payment due date 
     for a credit card account under an open end consumer credit 
     plan is a day on which the creditor does not receive or 
     accept payments by mail (including weekends and holidays), 
     the creditor may not treat a payment received on the next 
     business day as late for any purpose.
       (b) Length of Billing Period.--
       (1) In general.--Section 163 of the Truth in Lending Act 
     (15 U.S.C. 1666b) is amended to read as follows:


                     SEc. 163. Timing of Payments.

       (a) Time to Make Payments.--A creditor may not treat a 
     payment on an open end consumer credit plan [replace 
     italicized wording with: ``payment on a credit card account 
     under an open-end consumer credit plan''] as late for any 
     purpose, unless the creditor has adopted reasonable 
     procedures designed to ensure that each periodic statement 
     including the information required by section 127(b) is 
     mailed or delivered to the consumer not later than 21 days 
     before the payment due date.
       (b) Grace Period.--If an open end consumer credit plan 
     provides a time period within which an obligor may repay any 
     portion of the credit extended without incurring an 
     additional finance charge, such additional finance charge may 
     not be imposed with respect to such portion of the credit 
     extended for the billing cycle of which such period is a 
     part, unless a statement which includes the amount upon which 
     the finance charge for the period is based was mailed or 
     delivered to the consumer not later than 21 days before the 
     date specified in the statement by which payment must be made 
     in order to avoid imposition of that finance charge.
       (2) Effective date.--Notwithstanding section 3, section 163 
     of the Truth in Lending Act, as amended by this subsection, 
     shall become effective 90 days after the date of enactment of 
     this Act.
       The 21-day notice period became law on August 20. On behalf 
     of Missouri's 148 credit unions and their 1.3 million 
     members, we are asking for your help in supporting a 
     legislative solution. If we can assist with additional 
     information on this issue, please contact me. Other contacts 
     at the Missouri Credit Union Association regarding this issue 
     are Peggy Nalls or Amy McLard.
           Sincerely,
                                                 Roshara J. Holub,
                                                    President/CEO.

  Mr. FRANK of Massachusetts. With that, I yield back the balance of my 
time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Massachusetts (Mr. Frank) that the House suspend the 
rules and pass the bill, H.R. 3606.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.

                          ____________________