CARD ActThe long-awaited legislation on new credit card rules, otherwise known as the CARD Act, officially went into effect today. It's been a hard-fought battle for many consumer advocates and representatives of watchdog groups.

"This was a huge victory," Ed Mierzwinski, consumer program director for advocacy group US-PIRG, told WalletPop in an interview. Mierzwinski, along with Congressional Oversight Panel chair Elizabeth Warren, said in a recent conference call that while the passage of the CARD Act was a big step, it's only a first step.
Warren warned that credit-card companies are already ferreting out loopholes, according to the Huffington Post's account of the call. PIRG's Mierzwinski says his group pushed unsuccessfully for the Federal Reserve to add tougher language that would put a stop to credit card companies exploiting loopholes in the legislation. "Banks will evade the law because banks are like scorpions. It's in their nature," he says.

The absolutely necessary next step, he says, is for the government to create a Consumer Finance Protection Agency (CFPA). In the minds of its champions, this regulatory body would take charge of all retail banking enforcement actions, including those related to bank accounts, credit cards, auto loans and the many other ways average Americans interact with the financial industry.

The idea of a CFPA was a cornerstone of the Administration's plan to reform Wall Street in the wake of the bank ballots, but some key members of Congress have signaled recently that they might no longer push for such an agency.

Mierzwinski says a CFPA is the only way to protect consumers. Currently, banks can be regulated by any one of four different agencies; banks regularly pick and choose how they're structured so they can be regulated by the most lenient of these organizations. (This is a concept called "regulatory arbitrage," for those of you who like your vocab words.) If Congress were to create a CFPA, all banks would be subject to the same rules.

"The CARD Act is a tremendous and historic victory," Mierzwinski says. "It bans the worst credit card practices. It bans 'anytime, any reason' changes to people's accounts. It bans retroactive rate increases."

However, in order for the CARD Act to be enforced the way its advocates envision, a consumer-oriented agency will need to watch out for the "little guys."

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