Thought the House and Senate versions differ somewhat, the legislation is meant to protect consumers from excessive interest rates and penalty fees.
Public opinion polls have also shown strong support for credit card reform and Congressional leaders, as well as the President, seem well aware of that. Eighty percent of American households have credit cards, according to the White House, and pay about $15 billion in penalty fees every year.
When the legislation hit the Senate floor earlier this week, there was some hope a vote would happen by Thursday, but according to Congressional sources familiar with the legislative agenda the vote will now take place Tuesday.
President Obama has said he wants to sign a bill by the end of the Memorial Day weekend, but given the fact that the Senate and House versions are likely to require some reconciliation and thus new votes in each of the chambers, that may now be unlikely.
The Senate legislation, formally known, as The Credit Card Accountability, Responsibility and Disclosure Act, was authored by banking committee Chairman Chris Dodd (D-Conn.) but has since become a bipartisan effort with the backing of ranking GOP panel member Richard Shelby (R-Ala). Some 20 senators are co-sponsoring the bill, but it has nevertheless been slowed by a wealth of amendments.
Some of the measures in the legislation are also in new rules announced by the Federal Reserve in December 2008 but not scheduled to take effect until July 2010.
Key among the measures are prohibitions against interest rate hikes on existing balances in most cases as well as instant, unannounced rate increases. The legislation would also make credit card agreements simpler and more transparent.
A recent analysis by the non-profit Center for Responsible Lending found that credit card issuers are generally “raising interest rates on a larger portion of customers than usual and increasing the number of fees they impose.”
Business opposes the legislation, saying it could backfire by limiting credit at a time when the economy is already weak and mean fewer consumers qualify for credit cards.
At the same time, the White House, as well as many Democrats in Congress, expect the financial services industry to do more for consumers having accepted financial aid under the TARP.
The House version of the legislation was sponsored by key committee chairs Barney Frank (D-Mass) and Carolyn Maloney (D-NY), both of whom have been outspoken critics of some of the practices of big financial firms.
The President has taken an active interest in the legislation and is thought to have made his personal preferences on certain measures known to legislators.
Obama and Treasury Secretary Timothy Geithner also went so far as to meet with representatives of the credit card industry at the White House last month.