Schumer urges Fed to accelerate credit card reforms under legislative threat

Congressional Democrats said Wednesday they would force the Federal Reserve to speed up restrictions on the credit card industry if the central bank does not act faster.

Sen. Charles Schumer (D-N.Y.) said Democrats would pass legislation requiring the Federal Reserve to accelerate new restrictions on the industry that were part of a bill President Barack Obama signed into law in the spring. The House Financial Services Committee is scheduled to mark up legislation on Thursday that would push those dates forward to Dec. 1.

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House and Senate Democrats have been taking an increasingly tough position on the financial services industry, and particularly on credit card companies and the banks that issue them. Federal Reserve Chairman Ben Bernanke said in a letter that speeding up the date could "benefit consumers," but could also "lead to unintended consequences."

"If Chairman Bernanke will not act to speed up the effective date of these credit card reforms, we should quickly pass legislation in both the House and Senate to do so," Schumer said.

Obama signed a bill into law this spring aimed at curbing abusive practices in the credit card industry. The law is scheduled to take effect in three stages, with some of the more important changes slated to occur in February and April.

Democratic senators have also taken a hard line against financial companies for charging overdraft fees, a major source of profit for financial firms this year.

Democratic Sens. Chris Dodd (Conn.), Schumer, Jack Reed (R.I.), Sherrod Brown (Ohio) and Jeff Merkley (Oregon) sponsored legislation aimed at curbing the fees.

"Banks should not be trying to bolster their profits at the expense of their customers,” Dodd said. “This legislation gives Americans control over their bank accounts — giving them the chance to choose whether they want overdraft protection, establishing strict limits on these fees, and shining more light on these practices.”