Senate and Fed eyeing credit card restrictions

Curbs on lenders to target fees, rate hikes

Christopher Dodd will unveil legislation to improve billing and disclosure practices.

WASHINGTON - Washington policy makers are moving to impose restrictions on credit card lenders, responding to growing criticism over fees and interest rate increases blamed for pushing consumers deeper into debt.

Senate Banking Committee chairman Christopher Dodd today will unveil legislation aimed at improving credit card billing, marketing, and disclosure practices, the Connecticut Democrat's office said yesterday. The Federal Reserve will follow Friday with a plan to rein in "unfair" and "deceptive" credit card lending.

The Fed is developing rules with the Office of Thrift Supervision and the National Credit Union Administration to address congressional criticism that the central bank has done little to shield consumers from abusive lenders. The credit card industry opposes the plan, saying new regulations would increase costs and undermine efforts to manage risk.

The proposal "will undercut a lot of the innovations in the marketplace that have led to lower prices for consumers, and we're very concerned about that," Ken Clayton, senior vice president of card policy at the Washington-based American Bankers Association, said yesterday in a telephone interview.

Dodd's legislation will ban practices that "drag consumers into staggering amounts of debt, and too often harm, rather than help, the ability of American families to move up the economic ladder," according to the senator's news release.

Separately, the Fed is also developing rules to strengthen requirements for credit card firms to notify consumers before increasing interest rates or fees.