GOP Gags Witnesses On Credit Card Woes
A waiver seems to be a ploy leading to GOP silencing witnesses regarding a probable unfair business practice of American credit card companies. Interest rates would suddenly soar without issuing clients a prior notification.
Author:Darren McphersonReviewer:Camilo WoodFeb 02, 2023131.1K Shares2.3M Views
Here come the GOP gags witnessesfor a brewing issue involving credit card companies.
The Republican Party, aka the Grand Old Party (GOP) seems to be doing that.
The witnesses came to the nation's capital this week from as far away as Denver, Chicago, and Niagara Falls - five people who’d had tough experiences with their credit cardsand were asked to share those tales with a House panel.
Instead, they ran headfirst into the buzz-saw of Washington politics when the panel’s Republicans insisted the visitors allow their lenders to discuss their financial histories publicly - in any forum, at any time.
GOP Address: Cut Up the Credit Cards
The Ambiguous GOP Waiver
For four of the five witnesses, it was a deal-breaker.
Instead of signing the waivers allowing them to testify Thursday, they all sat silently in the audience.
One witness from Denver, Susan Wones, said:
“„I didn't want all my . . . information out there for just anybody.- Susan Wones
Wones saw the interest rateof her JP Morgan Chase card jump from 0 percent to 23 percent in one just month last summer without notification or explanation.
“I’m extremely upset I can’t talk about this,” Wones added.
Marvin Weatherspoon, a grandfather from Chicago, echoed the tale. He claims his card rate jumped from 4.25 percent to roughly 25 percent in the wake of one late payment to Bank of America.
He said:
“„The waiver was very vague. It didn’t address the issues we were here to deal with.- Marvin Weatherspoon
Backing Consumer Protections
The controversy came as members of the House Financial Services Subcommittee on Consumer Credit met to discuss legislation that would add a number of consumer protections to current credit card policy.
Among the changes, the bill would prevent card sponsors from applying interest rate hikes to existing balances. It would also require issuers to provide a 45-day notice of such hikes and to increase the minimum advance billing requirement from 14 to 25 days.
Bill sponsor Representative Carolyn B. Maloney (New York) said her proposal will add balance to a market that has grown wildly off-kilter.
In a statement, Rep. Maloney said:
“„The credit card industry has been clear about the responsibility imposed on consumers: make your minimum payments on time and stay under your limit.- Rep. Carolyn B. Maloney (New York)
Then she asked:
“„But what about the reciprocal responsibility of card companies?- Rep. Carolyn B. Maloney (New York)
The proposal has met considerable opposition from banks and other credit card sponsors, who argue that it would steal their power to set interest rates based on the risk of the individual card holder.
Without that option, companies say, rates for everyone would rise, while many borrowers would lose their cards altogether.
Most House Republicans have sided with the industry.
Representative Spencer T. Bachus (Alabama), a ranking member of the Financial Services Committee, said in a statement:
“„As with any government intervention in the free market, the bill presents a real danger of restricting the range of products and services that credit card issuers currently offer.- Rep. Spencer T. Bachus (Alabama)
Leave It To The Federal Reserve
Republicans and card sponsors both want Congress to remain on the sidelines while the Federal Reserve applies reform through regulations.
Oliver Ireland, a banking consultant with the Washington-based law firm Morrison & Foerster, told lawmakers that regulators will make more precise and appropriate changes than Congress ever could.
But supporters of congressional intervention say the Fed has a history of putting bankers’ interests above those of consumers.
Lawrence M. Ausubel, an economics professor at the University of Maryland, said:
“„The regulators have been lax in enacting consumer protections, except under the threat of legislation.- Lawrence M. Ausubel, Ph.D.
The Hearing And The Subtle Silencing
At Thursday’s hearing, the first panel was to consist of five card holders who had suffered interest rate hikes or unexplained user fees despite a claimed history of responsible borrowing.
The GOP waiver requirement came as a surprise, the witnesses said, not least because it surfaced just one day before the hearing.
Wones, the witness from Denver, said:
“„I didn’t have time to contact a lawyer or anything.- Susan Wones
In addition, witnesses said they were concerned with the vagueness of the one-sentence waiver language, which offered no limitations on where or when the lenders could discuss their credit histories.
Another witness, Steven Autrey, of Fredericksburg, Virginia, said:
“„I think we would have ended up in a banking journal five years from now as a case study. I don't know.- Steven Autrey
In 1999, Autrey said, he picked up a Capital One card because the 9.9 percent interest rate was advertised as “fixed for life.”
But last year, without indicating any problems with Autrey’s credit, the company hiked his rate to 16.9 percent.
Both Autrey and Wones said they were prepared to sign more detailed waivers that wouldn’t give the card companies so much freedom to discuss the witnesses’ finances outside of the hearing.
However, the committee’s Republican staff refused to compromise.
Wones said one GOP staffer “got belligerent and wasn’t happy” with her suggestions to modify the waiver.
The committee’s minority office did not respond to several calls for comment.
Final Thoughts
The plight of the borrowers - combined with the GOP’s efforts to silence them - have riled a number of House Democrats, some of whom accused the Republicans of protecting the credit card industry at the expense of consumers.
Representative Mark E. Udall (Colorado) called Thursday’s removal of the consumer panel “a form of intimidation.”
At an impromptu gathering after the hearing, Rep. Udall said:
“„Susan Wones is not going to put the credit card companies out of business. She just wants her story to be told.- Rep. Mark E. Udall (Colorado)
Maloney has scheduled a second hearing on the topic for April 9.
The New Yorker said she wants to work out a compromise allowing the same consumer witnesses to return.
Meanwhile, those would-be witnesses were openly frustrated with the odd experience surrounding their canceled testimonies - not to mention the partisan animosity that has come to define Washington politics.
Wones said:
“„I couldn’t deal with this stress on a daily basis. I’m not sure how anyone does.- Susan Wones
With the powerful GOP silencing witnesses, who - regular private citizens for that matter - would dare complain about any credit card mess?
Darren Mcpherson
Author
Darren Mcpherson brings over 9 years of experience in politics, business, investing, and banking to his writing. He holds degrees in Economics from Harvard University and Political Science from Stanford University, with certifications in Financial Management.
Renowned for his insightful analyses and strategic awareness, Darren has contributed to reputable publications and served in advisory roles for influential entities.
Outside the boardroom, Darren enjoys playing chess, collecting rare books, attending technology conferences, and mentoring young professionals.
His dedication to excellence and understanding of global finance and governance make him a trusted and authoritative voice in his field.
Camilo Wood
Reviewer
Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing.
Throughout his career, Camilo has contributed to numerous publications, covering a wide range of topics such as global economic trends, investment strategies, and market analysis. His articles are recognized for their insightful analysis and clear explanations, making complex financial concepts accessible to readers.
Camilo's experience includes working in roles related to financial reporting, analysis, and commentary, allowing him to provide readers with accurate and trustworthy information. His dedication to journalistic integrity and commitment to delivering high-quality content make him a trusted voice in the fields of finance and journalism.
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