Fed Chairman: Moving Up Credit Reform Could Cause Problems

BernankeMoving up the start-date of sweeping new credit card reform laws could cause hardship to small credit issuers, U.S. Federal Reserve Chairman Ben Bernanke has said in a letter to a House lawmaker.
The House Financial Services Committee is scheduled to consider moving the implementation of the reform up to Dec. 1, about three months earlier than the original start date. Bernanke was responding to a letter by the committee’s ranking member, Spencer Bachus,  R-Alabama, in which the congressman wanted to know if large or small institutions could implement the changes required under the reform by Dec. 1.
Bernanke said smaller card issuers rely heavily on third-party vendors to adjust their systems. And those third-party vendors are “currently overwhelmed by the demand from all of the institutions they service.” An increase in demand on third-party vendors could create a backlog.
Bernanke also said companies need to have sufficient time  “to allow for an orderly transition and to avoid unintended consequences, compliance difficulties and potential liabilities.”
The Fed cannot predict how speeding up the effective date would affect the availability of credit and rates on credit cards, he said.
Bernanke also wrote pushing up reform implementation would result in not “providing the public with advance notice and the opportunity to comment,” since  the Fed wouldn’t have time to solicit comments.
Bernanke’s comments drew a harsh rebuttal from at least one reform advocate. 
“For 14 years these are the arguments that have been used to allow abuses of consumers to continue. I’m sorry, but how much more abuse can consumers take?” asked Center for Responsible Lending spokeswoman Kathleen Day, in a statement on HuffingtonPost.  “We have to cut the banks’ addiction to bad practices. It’s too bad, but they should have thought about this beforehand.
“This is just another example of the Fed putting the interests of consumers behind those of the banks,” Day said.
See Related Article:
Lawmakers Want to Push Credit Card Reform Up to Dec. 1

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