President Obama Signs Credit Card Accountability, Responsibility and Disclosure Act of 2009

This afternoon once again President Barack Obama made history by using the "rule of law".

To ease the strain of financial burdens many American citizens have recently experienced as a result of greedy lenders and negative Wall Street trends, he signed the Credit Card Accountability, Responsibility and Disclosure Act of 2009.

As new restraints are being placed upon Financial Institutions disallowing them to crush the pockets of foolish or naive consumers, credit card agreements with a financial death wish attached will finally become extinct.

Going forward only Credit Card companies which prove to protect consumers not ruin them, will continue to exist in the world of Free Market Enterprise.

President Obama also praised Senator Dodd (D-CT) for his hard work in helping to draft this extremely important bill.

The Credit Card Accountability, Responsibility and Disclosure Act is effective approximately February 2010.

Thank you sir.

(President Obama's remarks made during today's press conference:)

"With this bill, we're putting in place some common-sense reforms designed to protect consumers like Janet."

"I want to be clear about this: Credit card companies provide a valuable service; we don't begrudge them turning a profit. We just want to make sure that they do so while upholding basic standards of fairness, transparency, and accountability. Just as we demand credit card users to act responsibly, we demand that credit card companies act responsibly, too. And that's not too much to ask."

"And that's why, because of this new law, statements will be required to tell credit card holders how long it will take to pay off a balance and what it will cost in interest if they only make the minimum monthly payments. We also put a stop to retroactive rate hikes that appear on a bill suddenly with no rhyme or reason."

"Every card company will have to post its credit card agreements online, and we'll monitor those agreements to see if new protections are needed. Consumers will have more time to understand their statements as well: Companies will have to mail them 21 days before payment is due, not 14. And this law ends the practice of shifting payment dates. This always used to bug me -- when you'd get like -- suddenly it was due on the 19Th when it had been the 31st."

"Lastly, among many other provisions, there will be no more sudden charges -- changes to terms and conditions. We require at least 45 days notice if the credit card company is going to change terms and conditions."

"So we're not going to give people a free pass; we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives."

"And this is a difficult time for our country, born in many ways of our collective failure to live up to our obligations -- to ourselves and to one another. And the fact is, it took a long time to dig ourselves into this economic hole; it's going to take some time to dig ourselves out."

"But I'm heartened by what I'm seeing: by the willingness of old adversaries to seek out new partnerships; by the progress we've made these past months to address many of our toughest challenges. And I'm confident that as a nation we will learn the lessons of our recent past and that we will elevate again those values at the heart of our success as a people: hard work over the easy buck, responsibility over recklessness, and, yes, moderation over extravagance."


The principles of sweeping reforms included in this legislation are:

* First, there have to be strong and reliable protections for consumers.

* Second, all the forms and statements that credit card companies send out have to have plain language that is in plain sight.

* Third, we have to make sure that people can shop for a credit card that meets their needs without fear of being taken advantage of.

* Finally, we need more accountability in the system, so that we can hold those responsible who do engage in deceptive practices that hurt families and consumers.

The Key Elements of this legislation will include:

Bans Unfair Rate Increases: Financial institutions will no longer raise rates unfairly, and consumers will have confidence that the interest rates on their existing balances will not be hiked.

* Bans Retroactive Rate Increases: Bans rate increases on existing balances due to "any time, any reason" or "universal default" and severely restricts retroactive rate increases due to late payment.

* First Year Protection: Contract terms must be clearly spelled out and stable for the entirety of the first year. Firms may continue to offer promotional rates with new accounts or during the life of an account, but these rates must be clearly disclosed and last at least 6 months.

Bans Unfair Fee Traps:

* Ends Late Fee Traps: Institutions will have to give card holders a reasonable time to pay the monthly bill – at least 21 calendar days from time of mailing. The act also ends late fee traps such as weekend deadlines, due dates that change each month, and deadlines that fall in the middle of the day.

* Enforces Fair Interest Calculation: Credit card companies will be required to apply excess payments to the highest interest balance first, as consumers expect them to do. The act also ends the confusing and unfair practice by which issuers use the balance in a previous month to calculate interest charges on the current month, so called "double-cycle" billing.

* Requires Opt-In to Over-Limit Fees: Consumers will find it easier to avoid over-limit fees because institutions will have to obtain a consumer’s permission to process transactions that would place the account over the limit.

* Restrains Unfair Sub-Prime Fees: Fees on sub prime, low-limit credit cards will be substantially restricted.

* Limits Fees on Gift and Stored Value Cards: The act enhances disclosure on fees for gift and stored value cards and restricts inactivity fees unless the card has been inactive for at least 12 months.

Plain Sight /Plain Language Disclosures: Credit card contract terms will be disclosed in language that consumers can see and understand so they can avoid unnecessary costs and manage their finances.

* Plain Language in Plain Sight: Creditors will give consumers clear disclosures of account terms before consumers open an account, and clear statements of the activity on consumers’ accounts afterwards.

For example, pre-opening disclosures will highlight fees consumers may be charged and periodic statements will conspicuously display fees they have paid in the current month and the year to date as well as the reasons for those fees.

These disclosures will help consumers make informed choices about using the right financial products and managing their own financial needs. Model disclosures will be updated regularly based on reviews of the market, empirical research, and testing with consumers to ensure that disclosures remain clear, useful, and relevant.

* Real Information about the Financial Consequences of Decisions: Issuers will be required to show the consequences to consumers of their credit decisions.

o Issuers will need to display on periodic statements how long it would take to pay off the existing balance – and the total interest cost – if the consumer paid only the minimum due.

o Issuers will also have to display the payment amount and total interest cost to pay off the existing balance in 36 months.

Accountability: The act will help ensure accountability from both credit card issuers and regulators who are responsible for preventing unfair practices and enforcing protections.

* Public posting of credit card contracts: Today credit card contracts are usually available only in hard copy and not in plain language. Now issuers will be required to make contracts available on the Internet in a usable format. Regulators and consumer advocates will be better able to monitor changes in credit card terms and evaluate whether current disclosures and protections are adequate.

* Holds regulators accountable to enforce the law: Regulators will be required to report annually to the Congress on their enforcement of credit card protections
* Holds regulators accountable to keep protections current:

o Regulators will be required to request public input on trends in the credit card market and potential consumer protection issues on a biennial basis to determine what new regulations or disclosures might be needed.

o Regulators will be required either to update the applicable rules, or to publish findings if they deem further regulation unnecessary.

* Increases penalties: Card issuers that violate these new restrictions will face significantly higher penalties than under current law, which should make violations less likely in the first place.

Cleans Up Credit Card Practices For Young People at Universities. The act contains new protections for college students and young adults, including a requirement that card issuers and universities disclose agreements with respect to the marketing or distribution of credit cards to students.

(President Obama signs sweeping Credit Card reform bill into law.)



Sources: Whitehouse.gov, Washington Post, MSNBC, Day Life, Reuters, Youtube