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Posts Tagged ‘politics’

The U.S. House of Representatives passed by a vote of 357-70 today, a so-called ‘credit-card bill of rights’ bill, following the adding of a provision that will require banks to apply consumers’ payments to balances with the highest interest rates first.

Uncollected credit card debt rose to 8.82% in February, and that’s the highest amount registered by Moody’s Investors Service Inc. since it began keeping records twenty years ago.

The legislation will also require credit-card companies to give forty-five days notice before increasing rates, and require statements to be mailed at least twenty-one days before the payment due date, and the provision will take effect ninety days after the measure is signed into law.

The House bill imposes broader restrictions than those enacted by the Federal Reserve in December, leading House Speaker Nancy Pelosi to say, “Very soon this will be the law of the land, and consumers will benefit. The House action today will give the legislation momentum heading into the Senate, and with a Democratic president who will sign final legislation there is little doubt it will get support needed in both chambers”.

The senior Republican on the House Financial Services Committee, Spencer Bachus, voiced concern however saying, “Too many restrictions will lead lenders, such as Bank of America Corp. and Citigroup Inc., to pull back on credit in the midst of a severe economic decline. Credit cards play a crucial role in the life of ordinary Americans. Any legislation affecting credit-card practices is going to have a profound effect. There are a great number of people whose rates will go up”.

Edward Yinglingm, who is the President and Chief Executive Officer of the American Bankers Association said in a statement, “It is vitally important to maintain access to credit at this difficult economic time. This is especially true for credit cards, which serve as a driver of economic activity and are relied on by consumers and small businesses as way to bridge short-term financial gaps”.

Finance officials from some of the world’s top economic powers, which included, the United States, Japan, Germany, France, Britain, Italy and Canada, have pledged to get their countries banks lending again, believing it to be the best way to end the world’s worst recession since the 1930s.

Treasury Secretary Timothy Geithner and his counterparts from the world’s top seven industrialized democracies, acknowledged on Friday April 25, in a joint statement that their economies will need to be jump started in order for the global economy to rebound.

A joint statement read, “We are committed to act together to restore jobs and growth and to prevent a crisis of this magnitude from occurring again, and we will take whatever actions are necessary to bring that about. Recent data suggest that the pace of decline in our economies has slowed, and some signs of stabilization are emerging. Economic activity should begin to recover later this year amid a continued weak outlook and downside risks persist”.

A goal of raising $500 billion for an emergency lending facility was set by G-20 leaders at their London summit on April 2 and Obama has asked Congress to put up $100 billion, and Europe and Japan have pledged equivalent amounts.

Other major countries, which include China, Russia and Saudi Arabia, have not come yet honored their commitments however, because China and several other big developing countries like India want to link the support to having a bigger voice in the IMF which predicts that the global economy will shrink this year, something that’s never happened in the post World War II period.

Earlier this week the IMF called on world governments to boost stimulus spending, especially on infrastructure projects such as roads and bridges, in order to create jobs, but European nations are loathe to run up huge budget deficits and have so far resisted U.S. pleas to increase their spending.

France’s Lagarde noted, “We are in a bind, if you will. On the one hand we have to inject public money into the economy because we believe this is the strongest and best multiplier. At the same time, in the medium and long term, we need to restore the sustainability of public finance”.

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