Law passes but credit cards get last laugh. For now.

May 23, 12:45 PMDC Corporate Ethics ExaminerJim Cunningham

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On Friday, President Obama signed the Credit Card Accountability, Responsibility and Disclosure Act into law. The law is a baby step toward providing protection to the customers that credit card issuers have come to view as prey.

However, as Wall Street Watch points out, the reform bill is, let’s say, less than perfect:

Congressional Credit Card Reform a 'Charade,' Consumer Advocate Says

LOS ANGELES, May 20 /PRNewswire-USNewswire/ -- The credit card legislation passed yesterday by the United States Senate won't protect consumers against outrageous interest rates or other egregious practices and represents an astounding victory for the banking and credit card industry, a consumer advocate said today.
Harvey Rosenfield, head of the California-based Consumer Education Foundation, noted that under the Senate bill:

• There is no cap on credit card interest rates. In recent months, companies have raised interest rates for some consumers -- even those with good credit -- to over 30%.

• Companies can raise interest rates on future purchases at any time. The bill only prevents companies from increasing interest rates on previous purchases.

• Credit card companies can unilaterally changes the terms of the credit card contract.

• Companies can still use fine print "arbitration" clauses to prevent consumers from suing them in court.

"This is not 'reform,' it's a charade," said Rosenfield. "After what American consumers have gone through, they deserve real relief. After all, the banking industry would not exist today were it not for a trillion dollar taxpayer bailout that allows banks to borrow our money from the US Treasury at a fraction of a percentage point and then turn around and loan it to us at twenty to fifty times that rate."

"The credit card industry's attempt to portray this as a defeat is just posturing designed to protect its political allies in Washington. As usual, no one in that city seems to be looking out for the interests of the people of our country."
The Consumer Education Foundation is a non-profit, non-partisan organization. In March, it co-published a two hundred page report on the causes of the financial debacle: "Sold Out: How Wall Street and Washington Betrayed America." The report can be downloaded at WallStreetWatch.org.

Source: Consumer Education Foundation
 

Still, the bill upset credit card execs who are unhappy that they’re no longer able to use their favored tactic of making the bulk of their “earnings” by setting traps for their customers and then charging penalty fees. Left with interest as their primary means of earning (Ahhhh, the good old days!), many of the credit card companies launched a pre-emptive strike against their customers, even their most responsible customers, by simply raising their interest rates. Customers of Capital One, for example, just saw their interest rates double on their existing balances.

In the interest of ending on a high note, still more help may be on the way.

The Federal Trade Commission today told the U.S. House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce that, in response to the current economic crisis, the FTC has substantially increased its law enforcement efforts to protect consumers of financial services. The FTC recommended legislative and other remedies to enhance the agency’s effectiveness...”

Talk is also beginning of having something like a Consumer Protection Agency for customers of financial services. A story about a cow and a barn door comes to mind, but like I said, I wanted to end on a high