ABA Issues Statement on Credit Card Reform Rules
Edward L. Yingling, president and CEO of the American Bankers Association, issued a press release today discussing the Federal Reserve's proposed rules regarding credit card practices and overdraft fees saying: “The Federal Reserve’s proposal is an unprecedented regulatory intrusion into marketplace pricing and product offerings. We are deeply concerned that these rules will result in less competition, higher consumer prices, fewer consumer choices and reduced consumer access to credit cards. In short, everyday consumers will bear the real cost of these proposals.
“The proposed rules are not the right policy response to concerns over the ability of consumers to understand the terms of their credit cards. For example, the proposal would greatly restrict the ability of card companies to charge interest rates that reflect the risks of different consumers, similar to how insurance companies charge different rates depending on drivers’ records. If card companies cannot fully reflect risk, then millions of consumers with good credit histories will end up with higher rates. The proposal would also have the likely effect of ending zero- or low- interest balance transfer options, which have helped consumers and small businesses.
“This is particularly perplexing as the result will be a reduction in credit availability at the very time the Fed is working to increase access to credit in the marketplace. Regulatory responses such as these are effectively price controls, which have never worked in the past, and we do not believe they will work here.
“We look forward to providing comments as the regulatory process moves forward, and urge regulators to fully consider the negative impact these proposals will have on American consumers.”
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