July 2, 2008

Ms. Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Ave, NW
Washington DC 20551

Re: Regulation AA – Unfair or Deceptive Acts or Practices, Board Docket R-1314, and Regulation Z, Board Docket R-1286 Office of Thrift Supervision: Docket ID: OTS-2008-0004 National Credit Union Administration: RIN 3133-AD47

Dear Chairman Bernanke, Members of the Board, and Board Secretary Johnson:

Consumers Union, the nonprofit publisher of Consumer Reports, appreciates the opportunity to comment on the important proposed Regulation AA. For the first time, this rule acknowledges what consumers and consumer groups have long known about the credit card and overdraft marketplaces – that they include some practices that are simply unfair or deceptive and must be stopped. While we recommend that the rule go further in specific respects, it is a strong beginning to address unfair practices with surprising and harmful economic results for consumers. We ask the Agencies to keep the docket for this rulemaking open after the proposed rule is adopted in final form, so that the Agencies can use as a basis for further rulemaking the many experiences reported to the Board in this unusual outpouring by individual consumers.

1. Summary and overview of comment.

We applaud the Federal Reserve Board, Office of Thrift Supervision, and National Credit Union Administration for recognizing that consumers in the financial services marketplace face deceptive or unfair practices which simply cannot be resolved with additional disclosure. This conclusion is extremely well-documented by the Agencies’ analysis, the Federal Reserve Board’s consumer testing, the General Accounting Office’s 2006 report on credit cards, the consumer group comments filed in response to the advance notice of proposed rulemaking, the many published studies cited in the Agencies’ materials, and the extraordinary number of individual comments already filed in the docket in which consumers describe their own unsatisfactory experiences with credit cards and overdrafts. The reports that Consumers Union has received from individual consumers similarly show that they often do not understand the ways in which credit card practices will deprive them of expected benefits until after it happens to them. Other consumer groups have documented the consumer problems resulting from automatic enrollment in overdraft loan programs.

To learn more about these rules and submit your own comments to the Federal Reserve Board, go to www.creditcardreform.org.