The Federal Reserve Board wants credit card companies to clean up their act, and the credit card companies couldn’t be happier. The Fed’s proposed regulation would give customers 45 days notice before a change to their card’s terms, require fees and interest to be shown separately on each bill, and would transform default APR into the more menacing-sounding penalty APR. None of this is objectionable to the credit card companies:

“We strongly agree that improved disclosures empower consumers to make better choices in our competitive marketplace,” said Edward Yingling, head of the American Bankers Association, a lobbying group that represents the biggest credit-card issuers.

We tell you why creditors are grinning, after the jump…

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Congress can’t wait to throw the credit cards companies across its knee and deliver a well-deserved legislative spanking. The creditors will gladly accept the Fed’s proposal if it will help them brand legislation introduced by Senator Carl Levin (D-MI) as unnecessary. The Levin bill, S. 1395, would: “bar companies from charging interest on debt paid by the due date, cap penalty interest-rate increases, prohibit interest from being charged on late fees or over-the-limit fees and prohibit late fees if a card-issuer delays crediting a payment.”

We have an easy solution: the Fed should adopt the proposed regulation and Congress should pass Senator Levin’s legislation. See, wasn’t that easy? — CAREY GREENBERG-BERGER

Fed Plans to Revise Credit Card Rules [Washington Post]
Board issues proposed amendments to Regulation Z [Federal Reserve Board]
Electronic Comment Form – proposed amendments to Regulation Z
S. 1395 [THOMAS]
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