Fed Could Remake Credit Card Regulations

New Rules Would Ban Retroactive Rate Hikes

By Nancy Trejos
Washington Post Staff Writer
Sunday, December 14, 2008

The Federal Reserve on Thursday will vote on sweeping reform of the credit card industry that would ban practices such as retroactively increasing interest rates at will and charging late fees when consumers are not given a reasonable amount of time to make payments.

The Fed, which has been considering the proposed changes since May, declined this week to release details of the final draft regulations. But banking officials and consumer advocates said that they do not expect substantial changes before the vote, especially since members of Congress have pressured the Fed not to water down the rules.

However, industry officials and consumer advocates said, the Fed will likely postpone a decision on a proposal to prohibit banks from charging fees for overdraft protection unless they have given customers the chance to opt out. Both the banking industry and consumer advocates considered the overdraft proposal flawed.

If the new credit card regulations are approved largely as proposed, they would represent the most significant overhaul of the industry in decades, banking officials and consumer advocates said. The Fed has not yet indicated a timeline for implementation.

(More here.)