House tries to speed up new credit-card law

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WASHINGTON — Responding to consumer frustration over rising credit card rates, the House of Representatiaves Wednesday approved legislation to accelerate the implementation of new laws to crack down on abusive practices by credit card companies to Dec. 1.

The House voted 331-92 to move up the effective date of recently approved restrictions on credit-card companies from the current February 2010 deadline of the law. The credit-card law limits the ability of banks to increase interest rates and bans deceptive practices.

The legislation is based on a bill approved by the House Financial Services Committee that includes a provision introduced by Rep. Brad Sherman, D-Calif., to allow smaller companies with fewer than 2 million cards in circulation to stick to the original February deadline.

The proposal's chances in the Senate were dim, where several lawmakers worried that a short deadline would hurt the industry and limit the availability of credit.

Committee Chairman Barney Frank, D-Mass., had sought to expedite the regulations, in part, because of his concerns that financial institutions were boosting interest rates prior to the effective date of the new legislation.

The exemption for smaller card issuers was introduced, in part, in response to concerns raised by Federal Reserve Chairman Ben Bernanke who earlier this week argued that the accelerated deadline would have a detrimental impact on smaller credit-card issuers who wouldn't have enough time to implement the regulations.

Democrats said the bill was a warning shot to lenders to stop price gouging.

"This is both real and a lesson to them," said Frank.

Investors seemed to take notice of the House rhetoric. Bank stocks tumbled in the last hour of trading on Wednesday immediately after the House vote, causing a late-day slump in the market.

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