Banks get OCC to do their dirty work.
By Consumers Union on Thursday, August 21st, 2008
Despite the unprecedented support for the recent proposed rule on unfair and deceptive credit card practices, a federal banking agency, the Office of Comptroller of the Currency (OCC) is urging the Federal Reserve Board and other federal regulators to water down the rule.
The OCC regulates national banks and claims that one of its objectives is to ensure fair and equal access to financial services for all Americans. But John Dugan, the head of the OCC sent a letter to the three agencies who proposed the rule, which lays out the same arguments being made by the credit card companies. He maintains that restricting these unfair practices would hamper the ability of banks to offer credit to consumers and recommends that the proposed rules be scaled back dramatically.
The OCC’s argument is basically saying that if banks can’t trick or cheat consumers they won’t be able to offer them credit. This sounds eerily similar to the arguments made by the mortgage industry right before the current foreclosure crisis. The agencies should recognize the importance of ending abusive lending practices when warning signs arise.
Instead of restricting their practices, Dugan says that federal regulators should simply require banks to provide better disclosure about their practices. Consumers Union is not alone is thinking that more disclosure of unfair practices falls far short of the protection consumers need. The Government Accounting Office and the Federal Reserve Board have both concluded that enhanced credit card disclosures don’t provide adequate protection for consumers.
Consumers should have the confidence of knowing that their interest rates won’t skyrocket if their payment gets lost in the mail or arrives a few days late. We urge the Federal Reserve Board to disregard this opposition and adopt these critical protections against unfair and deceptive credit card practices.