ACORN Applauds Fed Proposal For Crackdown On Abusive Credit Card Companies

The Association of Community Organizations for Reform Now (ACORN) is the nation's largest community organization of low- and moderate-income families. ACORN President Maude Hurd released the following statement today on the announcement of proposed new regulations on credit cards from the Office of Thrift Supervision, National Credit Union Administration, and Federal Reserve:

ACORN members are encouraged by this step forward, especially as it represents a break from the traditional hands-off approach of federal regulators under the Bush Administration. Finally, there seems to be some recognition that mere disclosure and words of encouragement are not enough to protect consumers. Although today’s proposed regulations are far from perfect, they represent a stark break from the failed policies of the past, and that alone is worth celebrating. In the current foreclosure crisis, many banks have decided to squeeze their credit cardholders to get some black ink on the books, and abusive credit card practices and arbitrary rate hikes are spiraling out of control.

ACORN members are particularly excited by the provision that would not allow credit card companies to apply payments to the balance with the lowest interest rate first, although we would like the provision to go further and require payments be applied to balances with the highest interest rate. This stronger option and many other provisions can be found in a proposal from Senator Chris Dodd for a Credit Cardholders’ Bill of Rights, which ACORN endorses and hopes to see adopted. ACORN also supports proposed protections to declare unfair and deceptive the charging of interest on debt that has been repaid and assessing unreasonable late fees.

We hope that this new proposed regulation signals a sea-change in the federal government and Federal Reserve’s approach to handling the financial industry. For years, ACORN has pressed the federal government to issue regulations protecting homeowners from predatory lending and our calls have gone unheeded. Perhaps one silver lining from the eminently preventable subprime crisis that we face today is that regulators have realized that laissez-faire approaches to these issues set up the markets for failure. Now regulators must go further, and Congress must also act to reign in abusive credit card practices.