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May 18, 2005
Senators Say Credit Card Companies Failing Consumers
Senate Banking Committee members and federal regulators yesterday
called on credit card companies to better inform consumers about the
potential costs and risks of long-term credit card debt,
CongressDaily reported. “We all, I think, benefit
from the credit card industry, but only if we know what we’re
buying,” Banking Chairman Richard Shelby (R–Ala.) said
during a hearing. Shelby has not decided whether to address credit card
marketing and disclosure practices through legislation, according to a
committee spokesman. But Shelby said the panel probably will continue
its examination of those issues after the Treasury Department releases a
report this summer on the state of financial literacy among consumers.
Sen. Christopher Dodd (D–Conn.) said credit card companies are
making “more money than ever” by charging usurious interest
rates and penalties. “Credit card issuers … are turning
credit cards into nothing less than wallet-sized predatory loans,”
said Dodd, who is sponsoring legislation that would bar credit card
companies from issuing credit cards to anyone under 21 years of age. His
bill also would require credit card companies to provide more disclosure
about interest rates, prohibit finance charges for on-time payments, and
bar over-the-limit fees for creditor-approved transactions. Several
credit card company executives said they do not engage in predatory
lending and have taken steps to improve disclosure, the newswire
reported.
href='http://banking.senate.gov/index.cfm?Fuseaction=Hearings.Detail&HearingI…'>View
witness testimony from this hearing.
Specter Postpones Panel Markup of Asbestos Bill
A closely watched Senate Judiciary Committee markup of asbestos
legislation that was carried over from last week and scheduled to resume
today has been postponed until Thursday, as Judiciary Chairman Arlen
Specter (R–Pa.) turns his focus to the debate over judicial
nominees, the CongressDaily reported. The asbestos markup
is scheduled to resume Thursday, as Specter tries to finish the
committee’s work on the asbestos bill before the Senate breaks for
the Memorial Day recess and build enough support for the bill to clear
the committee. Judiciary ranking member Patrick Leahy (D–Vt.), a
co-sponsor of the asbestos bill, said it would be
“impossible” for the Senate to pass the bill if Republicans
carry out their threat to change filibuster rules, Reuters
reported.
Citigroup Revises Credit Penalty Policy
Citigroup Inc. yesterday said it has revised a policy to give its
customers more notice that they may face higher rates for their Citi
Cards if they fall behind in paying bills to other credit card
companies, the Washington Post reported. In a Senate
banking committee hearing on credit card practices, Citi Card Executive
Vice President Antony Jenkins said his company would no longer
automatically, without notice, penalize a customer who has never made a
late payment on a Citi account but is delinquent on other credit cards
or loans by raising the interest rate on the Citi Card account.
Minimum Payments on Credit Cards Increasing
You may need to get ready to pay more on your credit cards. Three
major credit card carriers—Bank of America, MBNA and
Citibank—say they will raise minimum payments from two percent to
four percent, WSAV reported. That change could effectively double what
many consumers pay each month on their credit card balances. Sonny
Colley from Consumer Credit Counseling service says in the long run it
will help those carrying a lot of credit card debt. However, he
recognizes many who are just barely making their minimum payments now
will be in trouble in the short term.
Merger May Be US Airways’ Last Shot at Survival
After plunging twice into bankruptcy protection and cutting nearly $2
billion in costs, US Airways is pinning its hopes of survival on a
merger with America West Airlines, the Washington Post
reported. “We don’t have many other options left. This is
it,” said a US Airways Group Inc. executive. Read the full article
at www.washingtonpost.com.
Air Canada Parent ACE Readies Aeroplan IPO-Report
Air Canada parent ACE Aviation Holdings could spin off its Aeroplan
rewards program into an income trust and sell a minority stake in the
initial public offering worth more than C$300 million as early as this
week, a Canadian national newspaper said on Wednesday. The Globe
and Mail said ACE is reviewing the terms of the IPO that would
see a syndicate of investment dealers led by RBC Securities sell a
minority stake of less than 20 percent of Aeroplan. The plan gives the
consumer rewards program a value of at least C$1.5 billion.
MCI Comptroller to Resign May 30
MCI Inc. said on Tuesday its principal accounting officer will resign
as of May 30, and that the company’s CFO will oversee its
accounting, Reuters reported. MCI, which has agreed to be bought by
Verizon Communications Inc. for $8.5 billion, said comptroller Eric
Slusser was leaving the company to pursue an unspecified opportunity.
MCI emerged from the largest bankruptcy in U.S. history in 2004,
involving $41 billion in debt and an $11 billion accounting scandal.
UAL Mechanics Begin Vote on Tentative Labor Deal
Members of the union representing mechanics at bankrupt United
Airlines have given a lukewarm reception to a tentative labor deal that
would cut their wages by 3.9 percent, a union leader said on Tuesday,
Reuters reported. If the tentative agreement with United’s parent,
UAL Corp., wins ratification by the union membership, the mechanics will
take a reduction in their wages, overtime pay and sick pay as well as a
reduction in the number of their paid holidays, said LaMont Ray,
president of the Chicago-area Aircraft Mechanics Fraternal Association.
A membership vote was set to conclude on May 31.