Right-Wing's Pelosi Smear Ignores Historic Credit Card Reform Passed Under Her Watch
Research ››› ››› JEREMY HOLDEN, ZACHARY PLEAT & LESLIE ROSENBERG
Right-wing media figures are accusing Rep. Nancy Pelosi of a "conflict of interest" based on an investment in Visa when she was Speaker of the House. But as Pelosi herself noted, while she was Speaker she oversaw historic credit card reform that was opposed by the financial services industry and touted by consumer advocates.
Right-Wing Media Use 60 Minutes Interview To Accuse Pelosi Of Inappropriately Protecting The Credit Card Industry Against Reform
Pelosi Asked About Potential "Conflict Of Interest" On Credit Card Reform. During a November 3 press conference, Pelosi was asked whether she had invested in Visa, and whether that presented a conflict of interest when she served as Speaker of the House and oversaw efforts to reform the credit card industry. Pelosi responded in part:
PELOSI: Well, I will hold my record in terms of fighting the credit card companies, as a Speaker of the House or as a member of Congress, up against anyone. We had passed the Credit Cardholder Bill of Rights. I don't know what your point is. You like one bill better than another bill. No, this was the big powerful bill, and in fact we were able to achieve both once we were able to have a Democratic president. That is really all I am saying. [Press conference with House minority leader Nancy Pelosi, 11/3/11, via YouTube]
Breitbart.tv: "60 Minutes Challenged Nancy Pelosi On Her Conflict Of Interest While Speaker And Facilitating Financial Reform While Being Involved With Credit Card Companies." The exchange was posted on Andrew Breitbart's Breitbart.tv website, promoting the notion that Pelosi faced a "conflict of interest" while overseeing credit card reform as Speaker:
Fox Nation: "Pelosi Visibly Shaken When '60 Minutes' Confronts Her About Shady Investments." Fox Nation suggested that the exchange demonstrated that Pelosi had "shady investments":
[Fox Nation, 11/3/11]
But Pelosi Is Right: In 2009 When Pelosi Was Speaker The House Passed A Credit Cardholders' Bill Of Rights ...
Wall Street Journal: "Congress And The White House Are Taking Aim At Controversial Credit-Card Practices." In April 2009, The Wall Street Journal reported:
Congress and the White House are taking aim at controversial credit-card practices, from higher interest rates on past balances to fees for paying by phone or online.
In a bid to aid consumers hit hard by the recession, lawmakers are pushing legislation this week that would ban a long list of credit-card practices that essentially amount to higher costs for consumers. Meanwhile, the Obama administration has scheduled a meeting with executives from credit-card issuers at the White House on Thursday, adding to pressure on the industry. President Barack Obama plans to attend.
Consumer groups have been pushing lawmakers to act, saying cardholders need relief now. The current rules "give very little help to families that are struggling with their debt," said Lauren Saunders, managing attorney at the National Consumer Law Center.
"I don't think the issuers should wait for these rules to come out to start dealing fairly with consumers," she said. "The issue that's hurting consumers the most right now are these big retroactive rate increases. They could just stop doing those tomorrow."
But the industry is warning that some of the efforts -- including speeding up implementation -- would paralyze issuers and force them to raise interest rates, cut credit lines and cancel accounts, hurting consumers who need credit. [Wall Street Journal, 4/23/09]
McClatchy: "Consumers ... Would Get Strong New Protection" Under Credit Cardholders' Bill Of Rights. McClatchy reported in May 2009:
Consumers jolted by sharp, sudden interest rate increases on their credit cards would get strong new protection from such surprises under legislation that appears headed for Senate passage later this week.
The House passed its own "Credit Cardholders Bill of Rights" last month with strong bipartisan support -- and a strong push from President Barack Obama, who plans to discuss the issue at an Albuquerque, N.M., town hall meeting later this week.
Many banking industry officials are concerned about the legislation. [McClatchy, 5/12/09]
AP: "Congress Wrapped Up The Legislation Wednesday And Sent It To President Barack Obama, Who Plans To Sign It Friday." The Associated Press reported on May 20, 2009, that Congress finalized legislation including the Credit Cardholders' Bill of Rights:
Congress wrapped up the legislation today and sent it to President Barack Obama, who plans to sign it on Friday. The bill will revolutionize the market by restricting when and how a card company can raise an individual's interest rate, who can receive a card and how much time people are given to pay their bill. [Associated Press, 5/20/09]
... Which The Financial Services Industry Opposed ...
Financial Industry Consultant: "A Deep Recession Is An Odd Time To Assault The Credit Card Industry And Americans' Access To Revolving Credit." Eric Grover, a financial industry consultant, opposed the Credit Cardholders' Bill of Rights in an American Banker column, writing:
A deep recession is an odd time to assault the credit card industry and Americans' access to revolving credit. If not for the ideological animus toward and distrust of credit card firms and private enterprise more broadly, it would not be happening. [American Banker, 3/20/09, accessed via Nexis]
American Bankers Association Lobbied Against Credit CardHolders' Bill Of Rights. In a letter to lawmakers, the American Bankers Association complained that the bill would "limit a lender's ability to manage risk, price fees, allocate payments, and otherwise prudently conduct business." The letter concluded:
For the above reasons, we oppose H.R. 627 as it is currently constituted, and urge opposition to amendments that will further harm our ability to meet the credit needs of consumers and others. [American Banker Association Executive Vice President Floyd Stoner's letter to Congress, via Consumerist.com, 5/13/09]
Financial Services Roundtable Lobbied Against The Bill Of Rights. The Financial Services Roundtable established a "Credit Cardholder's Bill of Rights PR Toolkit" to help members lobby against the legislation. [Credit Cardholder's Bill of Rights PR Toolkit, via The Financial Services Roundtable, accessed 11/3/11]
... And Consumer Advocates Supported It
ABC News: "Consumer Advocates Hail" Credit CardHolders' Bill Of Rights. In May 2009, ABC News reported that Congress was "nearing completion of a bill that would place tough new restrictions on credit card companies and protect card holders from arbitrary rate hikes and other deceptive practices." ABC further reported:
Consumer advocates are hailing the bill of rights as a huge step for individuals over companies.
"Why is credit card debt different than any other form of debt? Credit card companies have given themselves the right to change any interest rate or fee at any time for any reason," said Travis Plunkett of the Consumer Federation of America.
Plunkett said more Americans have credit cards than have mortgages or car loans, so this legislation will reach deep into society.
Banks and the credit industry oppose the new regulation, arguing that additional rules will force them to cut down on the availability of credit and raise rates for the people who make their all their payments on time.
But Plunkett said rates are already up and credit is already hard to come by.
"That's happening now and there's no regulation," he said, arguing that smart regulation could actually improve the industry. [ABC News, 5/13/09]
Consumer Advocates Hailed The Bill Of Rights For Going "A Long Way In Reforming The Credit Industry." According to PolitiFact:
In large part, the law fulfills Obama's campaign pledge: It prevents creditors from imposing arbitrary rate increases on customers, it prohibits most rate increases meant to penalize consumers for late payments on unrelated accounts, and it requires companies to post credit agreements on the Internet, among other things.
The bill falls short when it comes to a prohibition of interest on the fees card companies charge consumers if they go over their credit limit or fail to pay their bills on time. But this omission is not considered significant by consumer advocates. They say the measure goes a long way in reforming the credit industry. For example, most people pay more than their minimum payment every month. That extra cash will now go toward paying down card balances associated with the line of credit, said Lauren Saunders who works for the National Consumer Law Center.
Another example: The new law prevents companies from raising interest rates on existing balances unless the bill goes unpaid for more than 60 days.
"That's a big win," said Ed Mierzwinski of U.S. Public Interest Research Groups. "It gets rid of any 'gotcha' tricks." [PolitiFact, 5/22/09]
Center for Responsible Lending President: Supporting The Bill Of Rights Was "A Vote On The Side Of Hardworking American Families." From a statement by Michael Calhour, president of the Center for Responsible Lending:
We applaud President Obama and congressional lawmakers on both sides of the aisle for their leadership in swiftly enacting new law to clean up abusive credit card industry practices. The overwhelmingly bipartisan vote in Congress to pass the Credit Cardholders' Bill of Rights was a vote on the side of hardworking American families. Today, with the President's signing the bill into law, the White House and Congress have blown the whistle on practices that for too long have tricked and trapped people into debt.
The Credit Cardholders' Bill of Rights arrives just in time. If deceptive credit card activities continued unchecked -- as happened with subprime mortgages -- the results would be even more devastating for borrowers and an economy already struggling to avoid financial ruin. This landmark legislation strengthens Federal Reserve rules set out last year and, equally important, ushers them in months sooner.
Sound lending practices, as Federal Reserve Board Chairman Bernanke often points out, are essential to a sound economy. This legislation will usher in rules to help ensure borrowers are treated fairly. That will make it more likely families and small businesses can repay their debt. And that will improve the marketplace and everyone's financial future.
The Credit Cardholders' Bill of Rights is a victory for fair play and a step towards financial recovery. [Center for Responsible Lending, 5/22/09]
New York Times: Credit Cardholders' Bill Of Rights Was "A Better Way To Help Consumers." In an editorial endorsing Congressional efforts under Pelosi to enact a Credit Cardholders' Bill of Rights, The New York Times opined:
After complaints from cardholders who felt tricked by their banks, the Federal Reserve last year proposed several useful changes that will not, unfortunately, take effect until July 2010.
There's a better way to help consumers. A credit card bill of rights proposed by Democratic Representatives Barney Frank of Massachusetts and Carolyn Maloney of New York would codify many of the Fed's rules into law. It would ban interest rate increases on existing balances unless payment is more than 30 days late, and it would forbid ''double-cycle billing,'' which means charging interest on debts paid off the previous month.
It would also require 45 days' notice for a rate increase in most cases. An even stronger bill by Senator Christopher Dodd of Connecticut would make it harder for people under the age of 21 to get cards, far too many of whom now think plastic is simply another form of cash. It would also require creditors to apply a cardholder's payment to the balance with the highest interest rate. So far, these reforms face fierce Republican opposition, especially in the Senate. [New York Times, 4/25/09]