Consumer Financial Protection Bureau Takes the Side of Bankers
Consumer Financial Protection Bureau Takes the Side of Bankers
The United States’ legal watchtower against loan sharks and predatory loaners has released the best news for these financial intermediaries to date. This announcement is about the amendments in the Federal Reserve prohibition to expensive applications to credit-cards and application fees.
The old law in 2010 prohibited the charging of issuing a credit-card to be greater than 25% of the client’s credit limit in the initial year deposit. Though it did not specify the regulations on additional charges and fees, the agency opt to include them in the Act to save borrows with not so spectacular credit from being preyed upon.
The Washington Post reported that one of the financial institutions filed a law suit to the agency. According to them they were complying with the Act’s imposed limit of 25% because they only required $300 as the credit limit for clients with a yearly additional fee of $75. However, it also required clients to pay a processing fee of $95 before the customer gets to open an account. This makes it exceed the 25% boundary set by the federal board.
Last September the bank was able to get a First Primer sanction from a court located in South Dakota against the Federal Reserve. Just this week, Ohio’s very own Richard Cordray, who headed the new office of the Consumer Financial Protection Bureau, proposed the change in the initial ban of the law. They also asked the public’s opinion about the proposal.
Credit-cards are risky loans; banks charge expensive fees because there is no guarantee that all those who get them will be able to pay the loans. Moreover, if clients who fell into bad credit fail to get their hands on a credit card, it will be hard for them to reestablish a healthy attitude towards their loans.
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Filed under: Credit • credit cards • Credit Score • line of credit • Loans • News
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