The Federal Reserve, says Senator Ron Wyden (D-OR), should get into the business of rating credit-card offers on a 1-to-5-star scale. For some reason, this hasn’t made it to his Web site yet, but the Minnesota Daily published this overview of the proposal:
The Credit Card Safety Star Act of 2007 would allow the Federal Reserve System to rate credit cards on a scale of one to five stars, with five being the safest for customers.
Credit card companies that raise interest rates without informing customers might receive a one-star rating more stars means less risk for consumers.
In a press release about the proposal, Wyden said he believes confusing credit card agreements can disguise requirements that result in higher payments and fees.
John Hall of the American Bankers Association is doubtful:
“We feel this proposal may be premature because the Fed Reserve is undergoing a two-year project to improve the regulations that banks must obey regarding disclosure of credit card terms and fees and rates,” he said.
Credit card disclosures are typically full of legal jargon, Hall said, because banks’ lawyers recommend they follow the regulations set by the Federal Reserve “to the letter” so they aren’t legally responsible for any problems. He said if the Federal Reserve changes the regulations, disclosures might become less confusing.
And I wonder how long it will take before Crappy Bank and Trust Company (Member FDIC) starts looking for a way to sue the Fed after getting a star and a half ten, twenty minutes?
Back in May, Senator Carl Levin (D-MI) came up with an industrial-strength rewrite of the credit-card regulations, which I mentioned briefly here; last I looked, Levin’s bill had never made it out of committee. Quelle surprise.
(Suggested by Fark.)