Earlier in 2009, Congress passed and President Obama signed legislation requiring several new credit card rules. These rules were designed to have credit card issuers end what were considered unfair practices, and to protect consumers against further large increases in rates and “hidden” charges. Under the terms of that legislation, most of those new rules were scheduled to take effect between February and August of 2010.
Many in Congress subsequently expressed concern that some credit card companies had raised interest rates and decreased credit limits on many consumers in advance of the effective dates of the changes. In response, H.R. 3639 was developed. This bill would have moved the effective dates of certain of the new provisions established in the previously-enacted legislation from dates in 2010 to December 1, 2009. This was a vote on an amendment offered by Rep. Maffei (D-NY) to make the new consumer protections effective immediately upon enactment of H.R, 3639, rather than waiting for December 1, 2009. (The vote on the amendment was held on November 4, 2009.)
Speaking in support of his amendment, Rep. Maffei said that the purpose of the previously-passed legislation was “to protect consumers from the abusive practices that many banks had made standard practice”. He then added: “(S)ince we passed and enacted (that legislation), credit card companies attempted to fleece customers and hope that Congress didn't notice or have time to act . . . Every day I hear from more and more constituents who tell me they have good credit, that they pay their bills on time, but that the credit card issuers have found a way to raise the rates to extraordinarily high levels. That is why I want to make all provisions of the (previous-passed legislation) effective immediately.
Maffei added: “(C)ustomers, especially in this economy, cannot wait any longer for these protections. The credit card companies apparently are able to make any changes in interest rates and procedures instantaneously . . . If we give them a week or two, they will slam our constituents with even higher rates, trying to squeeze more blood from a stone in the middle of a recession. We are not allowed to pass legislation retroactively, even though the card companies have retroactively raised rates on consumer balances. What we can do is make sure that we enact this legislation immediately.”
Rep. Maloney (D-NY), who was a sponsor of H.R. 3639, supported the Maffei amendment. She said: “(T)he banks and credit card companies have earned this regulation and earned this amendment because they did not use the time allocated to them to upgrade their systems. They used the time to raise rates unfairly . . . The bill that I proposed would go into effect in 5 weeks . . . but I think consumers deserve relief as soon as possible”
The Republican minority had opposed the previously-passed credit card legislation, and was opposing any effort to move up the effective date of that legislation. Rep. Hensarling (R-TX) was among those leading that opposition. He argued against the amendment by saying “there is never a good time to enact a bad bill. Here we are again in the midst of a huge credit contraction. Every single day people are waking up, they're losing credit cards . . . (at a time that we) have the highest unemployment rate in a quarter of a century. And yet in the midst of this credit contraction, when people are having trouble expanding their business, creating jobs, paying their bills, we are going to enact legislation that . . . makes the whole matter worse.”
Hensarling then spoke generally against the Democratic legislative program, which included major health care reform, that he claimed increased federal spending far too much. He noted that a number of his constituents use credit cards to help pay for their medical expenses, and asked, rhetorically: “(W)ill our constituents be less able or more able to afford to pay for this $1.3 trillion government takeover of our health care system if we pass this amendment? My guess is that the gentleman from New York's amendment fails that test.”
He also argued that the previously-enacted legislation “erodes the ability to do risk-based pricing and takes us back to an era where a third fewer people had access to credit cards and everybody paid annual fees and everybody paid one universal high interest rate. The (previously-passed credit card) legislation takes us down that road, and Rep. Maffei's amendment gets us there tomorrow.”
The amendment passed by a vote of 251-174. Two hundred and forty-three Democrats and eight Republicans voted “aye”. One hundred and sixty-four Republicans and ten Democrats voted “nay”. As a result, an effective date for certain new consumer protections for credit card holders, (the date of enactment of H.R. 3639), was added to the legislation.