The Obama administration has made several announcements with information on the jurisdiction of the Consumer Financial Protection Agency, an agency that would regulate credit card and mortgage industries. The chairman recently sent guidelines that would regulate the fees, terms and interest rates on a variety of consumer products, the congress emphasized the urgent approval.
The new agency consolidates information consumer in a single agency versus handful of different regulators who share these duties currently. Two of the main responsible agency would be to supervise the credit card legislation passed by Congress in May, and to create a series of easy to understand mortgage products. The operative word for both tasks is & ldquo; plain vanilla & rdquo; Agency strives to create financial products that are straight instead of the complicated regulations, terms and conditions are common in these products today.
The passage of the credit card bill and the creation of the Consumer Financial Protection Agency were both fiercely opposed by the industry to be regulated. Consensus argument among these industries was that the proposed regulation would make borrowing more expensive, restrictive and more difficult for consumers. Elizabeth Warren, chair of the Congressional Oversight Panel has been dismissive of the lending industry and rsquo; self-serving grounds for allowing them to continue lending without supervision is, the combination of the new bill with oversight by the new agency could reduce the costs associated with credit cards and other lending vehicles. She told Reuters recently, "with simple products and simple information, the market for these products will change dramatically, and rdquo
Much to the chagrin of Ms. Warren and other members of Congress, the new bill phases in its restrictions between now and February, leaving lenders with ample time for reaction to the plan, contrary to Warren & rsquo ;. Statement by lower costs for consumers, credit card companies are already making it more expensive for consumers and a further seven-month leeway to raise interest rates, cut credit limits and raise fees.
Late. Charles E. Schumer (DN.Y.) has requested that the Federal Reserve step in to use his emergency powers to limit rate increases to no avail. "This is what many of us feared about a law that does not enter into force immediately," said Schumer. "It was never going to take so long for the credit card companies to get ready for the new reforms. Instead, issuers are using the delay in the entry into force turning more dollars of their clients. It is against the spirit of the law, and that is simply wrong" Reviews
Here and rsquo; s list of some of the increases imposed by credit card companies as a reaction to Congress & rsquo; measures.
Chase will raise the minimum payment requirement to 5% from 2% to some of its customers starting in August.
Balance transfers at Chase and Discover have already been raised to 5% of the total, up from 3% and 4% respectively
Bank of America raised fees on balance transfers and advances to 4% from 3%
The expectations of industry watchers is that these types of searches will continue until the bill comes into force credit card companies have rationalized increases says that the restrictions on interest rate hikes limits their ability to manage risks if they can & rsquo; .. t raise interest rates on the riskiest borrowers their portfolios to manage this risk, they will raise the interest rate on the entire portfolio.
An important part of the growing risk of credit card companies is the reduction in the collective credit score of borrowers across the country as foreclosures, wage cuts and job losses increase as a result of the deepening recession. Charge-offs on credit card companies hit record levels in June losses reaching 10.44%, according to data from Fitch Ratings. Many of the lenders have taken losses on mortgage portfolios, as well. Losses on mortgages made many of the lenders to begin raising interest rates on credit cards the fourth quarter of 2008. It was these increases, many without notice to the card holder in good standing, who gave additional incentive for Congress to pass credit card bill some six months later. Of the six majors Citi has sat in the largest interest rate hikes across the board increases in credit card purchases and monthly balances.
As Congress and the credit card companies continue their struggle, the big losers at least eight months gaping hole between the passage and implementation of the law, will be credit card holders. Free to go about business as usual until the beginning of 2010, credit card companies will likely continue to raise all possible price and charge them to as many of these fees will be considered as benchmarks when the law is finally in force. For many consumers, the proposed protection in the bill will be too late. Chase & rsquo; s minimum payment increase will raise the monthly obligation of a $ 20,000 balance from $ 400 to $ 1,000, a tough pill to swallow for consumers already struggling to make payments. For those who can transfer their balances from Chase to avoid increased minimum payment will be higher fees balance transfer them here to make the change
Members of Congress have expressed their annoyance at the credit card company and rsquo. measures, calling them "unfair and deceptive & rdquo;. Rep Carolyn B. Maloney (DN.Y.) smoked ,." Capricious actions like these are why Congress overwhelmingly passed and President Obama signed, my credit card reform bill: to level the playing field on behalf of consumers. "It may be well intended, but what consumers will see in anticipation of the field is directed will be higher fees and interest rates, in some cases dramatically so. Because these costs ramp up, and every month is the question many will ask why Congress allows the credit card companies another seven months to jack up all the possible charge that could be put on a monthly bill
Wednesday 9 March 2016
02:09
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