Congressman Ellison Acts Against Irresponsible Lending and Unfair Credit Card Gimmicks

Posted on May 7, 2009

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From Congressman Keith Ellison’s Newsletter

Irresponsible lending practices and lax regulation by the Bush Administration were driving forces in the collapse of the financial markets and the largest number of home foreclosures since the Great Depression. As a member of the House Financial Services Committee, my focus is on preventing this from happening again. This means restoring common-sense regulation, outlawing abusive lending practices, and providing effective protections for consumers.

Protecting Renters from the Foreclosure Crisis

In 2007, I held a Financial Services hearing in Minneapolis, and a constituent testified that she found herself in a dilemma. She was renting a home that entered foreclosure and she learned that she would be evicted as a result. She was a model tenant; she paid her rent on time, but her landlord lost the home to foreclosure. Incredibly, there are currently no federal laws to protect renters in this situation.

Too many Minnesotans are being inadvertently victimized in this way by the foreclosure crisis. The renters bear no responsibility for the foreclosure, and they are usually unaware that the landlord is having payment trouble until they receive an eviction notice. That is why I introduced legislation to require a minimum of 90 days notice before the tenants can be evicted so the new owners can move in. If an investor buys the property, then the tenants would be allowed to stay in the unit until the end of their lease. This three-month cushion can mean the difference between finding safe, affordable housing and homelessness resulting from a sudden eviction. I am proud to announce that my renter’s protection bill is included in the Mortgage Reform and Anti-Predatory Lending Act, which the House passed this week.

Stopping Unfair Credit Card Gimmicks

Last week, the House passed the strongest piece of pro-consumer credit card legislation in a generation, called the Credit Cardholders’ Bill of Rights. This bill stops many of the gimmicks, hidden fees, and unfair practices that some credit card companies use to collect extra fees or trip you up with confusing terms.

The Credit Cardholder’s Bill of Rights helps you by:

  • Protecting cardholders from arbitrary interest rate increases
  • Preventing cardholders who pay on time from being unfairly penalized
  • Protecting cardholders from due date gimmicks
  • Shielding cardholders from misleading terms
  • Empowering cardholders to set limits on their credit
  • Requiring card companies to fairly credit and allocate payments
  • Prohibiting card companies from imposing excessive fees on cardholders
  • Preventing card companies from giving subprime credit cards to people who can’t afford them
  • Requiring Congress to provide better oversight of the credit card industry

One particularly egregious practice is known as Universal Default. Under Universal Default, if you have a late or missed payment on one of your credit cards, not only can that credit card company raise your interest rate, but other card companies can do the same without warning — even if you have a perfect record with them. I’ve authored a bill to prohibit Universal Default, and that protection is included in the Credit Cardholders’ Bill of Rights. I’m hopeful that the Senate will pass this bill soon so that President Obama can sign it into law.

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