Thursday, March 4, 2010

Federal Reserve Rule Proposal for Credit Card Issuers

The Federal Reserve Board on Wednesday March 3 proposed a rule amending the Truth in Lending regulations (Regulation Z) that would prohibit credit card issuers from charging unreasonable late payment fees and other penalty fees. The amendments would also require credit card issuers to reconsider increases in interest rates.

According to the press release, "the proposed rule would:

  • Prohibit credit card issuers from charging penalty fees (including late payment fees and fees for exceeding the credit limit) that exceed the dollar amount associated with the consumer's violation of the account terms. For example, card issuers would no longer be permitted to charge a $39 fee when a consumer is late making a $20 minimum payment. Instead the fee could not exceed $20.
  • Ban inactivity fees, such as fees based on the consumer's failure to use the account to make new purchases.
  • Prevent issuers from charging multiple penalty fees based on a single late payment or other violation of the account terms.
  • Require credit card issuers to inform consumers of the reasons for increases in rates.
  • Require issuers that have increased rates since January 1, 2009 to evaluate whether the reasons for the increase have changed and, if appropriate, to reduce the rate."

Below is a link to the press release and the proposed rule.

http://www.federalreserve.gov/newsevents/press/bcreg/20100303a.htm

Paul Weiffenbach

Wednesday, March 3, 2010

SEC, IRS to Cooperate More Closely on Muni Matters

Yesterday the Securities and Exchange Commission and the Internal Revenue Service entered into a Memorandum of Understanding (MOU) outlining the cooperative efforts the two agencies will undertake to ensure regulatory compliance by the municipal securities industry. The press release accompanying the MOU stated that . . .

"[t]he SEC and IRS will work cooperatively to identify issues and trends related to tax-exempt bonds in the municipal securities industry and to develop strategies to enhance performance of their respective regulatory responsibilities. To support this effort, the two agencies will work through a standing Tax Exempt/Munipal Securities Committee to discuss policy, procedures and compliance issues."

The press release and MOU can be found at the link below.

http://www.sec.gov/news/press/2010/2010-30.htm