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House Passes Credit Card Reform But Foreclosure Plan Rejected By Senators

A credit card bill that protects consumers from increase of interest rate and hidden fees was officially passed by the US House of Representatives after updating a few provisions. The so-called “Credit Card Bill of Rights” passed by 357-70 vote. The measure which is highly supported by President Barack Obama is expected to be passed by the Senate by next week

Nancy Pelosi who is the House Speaker believes that the measures are expected to be imposed as the law and most of the consumers are expected to benefit from it.

The debt of uncollectible credit card had risen to 8.82% by February, and this is the highest value in the last 20 years that investor services like Moody’s has in records. Most of the lawmakers were feeling the pressure from the constituents to take action against the rising credit card practices such as sudden interest rate increased and extra fees charged to consumer accounts.

Broader restrictions are imposed by the House Bill as compared to those that were actually enacted by the Federal Reserve in earlier December and scheduled to start by July 2010. It would certainly changes the way credit card companies operate. Spencer Bachus, who is also senior Republican from the House Financial Services commented that the restrictions would simply leave lender pulling back from credit at the time of economic crises.

In the mean time, the Senate has rejected a legislation that will allow bankruptcy judges to cut on with mortgage terms in order to help borrowers avoid the foreclosure. This may in deed be a victory for the banks and credit unions that suggest that such move would certainly lead to higher loan costs.

The legislation won by the “cram-down” with 45 to 51 vote. The measure which was passed by the House with 234-191 vote on March 5th needs at least 60 votes to pass. This may be a major set back for Obama administration, including cram-down in opposing foreclosure plan with a simple aim to help 9 million of the homeowners.