Feds May Crack Down on Credit Cards -- Eventually

Federal officials have promised to take action against banks and credit-card companies that use over-the-top tactics to sap consumers' cash. But the banking industry -- and government officials themselves -- may stand in the way of quick reform.

Congress is considering legislation that would make changes to interest rates, fees, billing, payments and disclosures. Federal banking regulators have proposed a narrower set of rules to protect consumers from overdraft fees, sudden interest-rate hikes and a practice known as "double-cycle billing," in which a company charges interest on debt that has already been repaid.

Consumer advocates, who have been pushing for tighter credit-card rules for years, are hopeful that the economic climate will push reform. In an election year, with lending practices under a harsh spotlight, it's tough for legislators to support the banking industry over consumers.

"The mood is changing -- it would have been unthinkable a couple of years ago," said Lauren Saunders, managing attorney at the National Consumer Law Center. "But now people on both sides of the aisle are recognizing abuses in the credit-card industry."

Still, she noted, "the Banking Committee is a tough committee, and to get anything passed through Congress is tough."

Legislation unveiled late last month by Connecticut Sen. Chris Dodd essentially molds together ideas from several other proposals that have tried and failed before. His Credit Card Accountability, Responsibility and Disclosure Act (or CARD Act) is so far-reaching that it's unlikely to gain approvals from all of his Democratic contemporaries, much less his Republican counterparts.