Soon-to-be head of the Consumer Financial Protection Agency Elizabeth Warren recently revealed the direction in which she plans to take the financial industry watchdog organization when it begins operations in July.
Warren, speaking at the Department of the Treasury on Feb. 22, 2010—the one-year anniversary of the Credit CARD Act—said that while she is impressed with the initiative many credit card companies have shown in doing away with deceptive re-pricing tactics and egregious fees, work remains to be done in making credit card offers truly comparable and easy to understand. In addition, Warren said her agency will stay committed to preventing issuers from exploiting whatever loopholes may exist within current laws.
These plans have been met with mixed reactions throughout the credit card industry. Credit card companies, though pledging continued cooperation, have indicated their desire for federal regulators to turn their attentions elsewhere.
“I hope they focus a little more on mortgages and other financial products, given the amount of change that has already occurred in the credit card industry,” said Discover Financial Chief Operating Officer Roger Hochschild, as quoted by Reuters.
Industry experts concur, arguing that while regulators need to stay on top of credit card companies’ latest practices, CARD Act rules have already brought credit card industry transparency up to par relative to that of other financial products.
“The CARD Act and its subsequent enforcement by the Fed have been, on the whole, very successful,” said Odysseas Papadimitriou, CEO of WalletHub.com, a leading credit card comparison website. “Regulators now must turn their attention to applying similar consumer protections to business credit cards, prepaid cards, mortgages, etc. An obvious place to start is to minimize the number of different fees prepaid card issuers can charge.”
Business credit cards were not included within the scope of the CARD Act and do not enjoy the same protections against interest rate increases as do personal, or general-use, credit cards. Prepaid card offers are still plagued by the countless fees for different transactions and services that once made credit card offers nearly impossible to compare. And confusion persists as to what fees should be included in the calculation of a mortgage’s APR.
It therefore appears that while considerable reform has been bestowed upon the consumer financial landscape throughout the past year, more is yet to come. The exact extent of the reforms and the specific areas of their application are yet unknown and both remain points of mild contention for industry insiders.