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Credit Slips Goes to Washington

posted by Elizabeth Warren

Today Katie Porter, Adam Levitin and I testified before the Financial Services subcommittee on Financial Institutions of the House Committee on Financial Services, along with Professor Larry Ausubel and four representatives of the credit card companies.  Congresswoman Maloney has sponsored a bill with 82 coauthors that would outlaw some of the worst credit card tricks and traps.

There's a lot to talk about, but I want to start our coverage with the four people who didn't get to talk. 

Our panel was supposed to be the second panel.  The first was four regular people who had credit card stories to tell.  They had flown in from around the country with their credit card bills in hand, only to learn that they couldn't talk unless they would sign a waiver that would permit the credit card companies to make public anything they wanted to tell about their financial records, their credit histories, their purchases, and so on. The Republicans and Democrats had worked out a deal "to be fair to the credit card lenders."  These people couldn't say anything unless they were willing to let the credit card companies strip them naked in public.

So that's where it stood when Congressman Bachus roared into the hearing about three hours after it had started.  It seems that someone in the press had made some critical statement about the deal, and he was furious. He kept talking about how it wasn't fair that someone could say something and there wouldn't be any way for the credit card companies to say whether it was true or not. Fair is fair, he kept insisting.

I had never heard of a deal that kept ordinary citizens from testifying, so I asked a question to make sure I understood. During the preceding 3 1/2 hours the credit card issuers had repeatedly made various factual statements about their practices, their customers, their revenues and so on (e.g., "30% of customers with two late payments will default," "College students have the same default rates as our other customers" or "98% of payments are made for free.") So I asked if the credit card companies were going to testify to such factual statements, would they be required to produce the data to back up the claims so that we could all see it and evaluate it.  In our testimony, Katie, Adam, Larry and I all used public data and footnoted our work.  Surely it wouldn't be fair for the credit card companies to make factual assertions based on secret data that no one could challenge because no one else had any access to the underlying information.  If they want to testify as to "facts" about their customers, shouldn't hey have to back up their claims?

I never quite understood the Congressman's reply.  I'm still waiting to find out what fair-is-fair really means.


There was another irony to Rep. Bachus's "fair is fair" oratory. The Congressman complained that he had a made an "agreement" with the Democrats (or at least with some of them) about the consumer witnesses' testimony. He was upset that the terms of the deal changed after the fact. Now whose practices do those sound like?

I can only imagine how apoplectic Congressman Bachus will be if his credit card balance is ever repriced retroactively.

I love this site! Thanks for your efforts & for sharing. Bailey

"fair is fair" “Legend of Billy Jean” filmed here in Corpus Christi Texas in the 80's. I do not think consumer debtors can get better representation in Washington than this panel. In reality our elected representatives should be using their influence and votes to represent the needs of the people who elected them. I guess some were elected by the Credit Card Lobby.

Thank you for your collective service and expertise. May God bless your endeavors. I pray that your strength fail not and I ask the Lord to renew your strength so that you may mount up with wings as eagles. You will run and not be weary you will walk and not faint.

Again thank you for your service to us all.

Thanks for sharing Credit Slips and Mr. Autrey’s testimony. H.R. 5244 is an important step to help foster more transparency with credit card practices. To continue transparency, I would also like to see data about the number of credit card complaints that are filed with the OCC including detailed information on specific types of card complaints, average time to resolve and the number of complaints that have been fully resolved in favor of the cardholder vs. card lender. It would also be helpful to measure from a baseline the increase or decrease in complaints after reforms have been implemented.

I am shocked that both your political parties colluded on a deal to silence individual credit card holders and enable the credit companies to be the only voices heard in this "debate."

What individual wants to be forced to expose all his or her credit transactions to public scrutiny? The fact is, though, this deal contravenes a US Supreme Court ruling which makes it illegal to force an indivivual to speak when they do not wish to. This deal can be successfully challenged in court!

In 1986 a Supreme Court ruling, to be found at http://laws.findlaw.com/us/475/1.html, enhanced the First Amendment rights of corporations. The Public Utilities Commission of California had required the Pacific Gas and Electric Company to include in its billing mailouts a newsletter from an activist group called “Toward Utility Rate Normalization,” or TURN. Sometimes the articles within this newsletter raised points or took political positions with which the company disagreed. The company claimed that its First Amendment rights included the right not to be forced to disseminate viewpoints that it disagreed with, and the Supreme Court accepted this view. Justice Powell said in conclusion:

“For corporations as for individuals, the choice to speak includes within it the choice of what not to say.”

This being the case, the political parties had no right whatsoever to force the individuals mentioned above to expose their own financial dealings in return for being allowed to speak, as this ruling means that no individual can be forced to speak if they do not want to.

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