Romney and Republicans:
President Obama`s expansive agenda has brought the costs of excessive regulation into high-resolution focus. A number of his major initiatives like Dodd-Frank … represent a quantum increase in the scale of the regulatory burden on the American economy.
The CARD Act and Dodd-Frank Law both cut into revenue stream of major banks, hurting those banks that rely on subprime consumers paying late fees and high credit card interest rates as a primary source ofrevenue and profit.
Obama and Democrats:
New laws protect consumers from exploitation and predatory practices of banks and credit card companies. They also claim the bills ultimately benefit the credit card industry, because of new requirements for explaining their terms and conditions clearly protect them from cardholders who will default and leave them holding the bag.
If Mitt Romney is elected President in November, financial reforms: the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Credit CARD Act of 2009 that President Obama has worked so hard to enact during his first term, may be in danger. Mitt Romney, Newt Gingrich, Ron Paul, and all the usual GOP suspects oppose Obama`s attempts to regulate the credit card industry.
What are these two legislations and what do they mean to credit card holders? In brief:
The Dodd-Frank Reform – signed into law by President Barack Obama on July 21, 2010
- Deeper regulatory changes on Wall Street, including stronger transparency of financial markets.
- Introduced Consumer Financial Protection Bureau and specified standards for disclosures on financial products;
- Allowed government coordinated dissolution of bankrupt companies and extend bail-outs at the discretion of Federal Reserve in “unusual or exigent circumstances”;
- Improved accounting and tightened regulations ofcredit rating agencies.
The CARD Act – signed into law by President Barack Obama on May 22, 2009
- While permitted to increase the interest rate on new purchases, it prohibited from increasing the interest rate on an existing balance unless the cardholder has missed two consecutive payments; allowing for 21 days grace periods and requiring a 45 days advance notice on penalty rates – during which time the consumer may cancel the account.
- Prohibtted involuntary overlimit fees and setup universal Penalty and Late fee structure, including $25 late fee for a first violation and $35 for a second violation within the next six months.
- Added more transparency to credit card monthly statements.
The CARD Act and Dodd-Frank Law both cut into revenue stream of major banks, hurting those banks that rely on subprime consumers paying late fees and high interest rates as a primary source of revenue.
A few months before the CARD Act was signed into law by President Obama, Romney appeared on CNN to discuss how banks can still get around them.Clearly, if given a chance, Mitt will be eager to do away with the Reform if he can, and free the banks to operate with less restriction and regulation.
What does Mitt himself say about credit card reform?
“President Obama`s expansive agenda has brought the costs of excessive regulation into high-resolution focus. A number of his major initiatives like Dodd-Frank . . . represent a quantum increase in the scale of the regulatory burden on the American economy.”
The contrast between the parties is clear. President Obama and the Democratic majority in the House and Senate prioritized credit card reform and worked to make sure that both of these laws were enacted. They proudly defended them during the campaign and tout them whenever they get a chance, while Republican candidates, especially Mitt Romney and Newt Gingrich, loudly promise to repeal both of these laws upon being elected to the highest office in the land. It`s the same old song – liberal love to regulate, feeling that they are defending the average American consumer, while Republicans do away with regulation as much as possible, trying to free that average American consumer from the shackles of big government.
Romney, The Liberator Vs. The Obamanator: Protector of Regular Joe and Jane
President Obama and the Democrats argue that these new laws protect consumers from exploitation and predatory practices of banks and credit card companies. They also claim the bills ultimately benefit the credit card industry, because of new requirements for explaining their terms and conditions clearly protect them from cardholders who will default and leave them holding the bag. As America struggles to recover from the recession, there is no doubt that many consumers are swimming in debt and some type of credit-card relief is needed. The big banks got their bailout – what about the rest of us?
The increased oversight powers given to Congress, the Department of Justice and the newly-created Consumer Financial Protection Bureau during the last four years would seem to protect the average voting credit card customer, while the GOP expects consumers to act in their own best interests and not need government to protect them and hold their hands.
What else does Romney say about Obama`s fiscal policies? The following quote is from his website:
“After three years of President Obama, many now question whether we can ever return to fiscal sanity, let alone fiscal strength. A point of no return may well be approaching – a decade of huge deficits could drive our principal payments and interest rates beyond our reach while starving the economy of the capital it needs to grow.”
As the race continues to heat up and we count down to November, it remains to be seen what effect the candidates would have on credit cards and credit card reform.