WASHINGTON (12/9/11)--Rep. Carolyn Maloney (D-N.Y.) and several other U.S. House members have asked the Consumer Financial Protection Bureau (CFPB) to conduct an extensive review of the impact that ability-to-pay rules that were imposed by the Credit Card Accountability Responsibility and Disclosure (CARD) Act and became effective on Oct. 1 are having on the ability of some consumers to obtain credit.
The ability-to-pay rules, which are now part of Regulation Z, require a card issuer to consider a consumer's independent ability to make required payments on a credit card account, regardless of the consumers age, before opening a new card account or increasing the credit limit on an existing account. Outside of community property states, a card issuer may not rely solely on household income provided by an applicant on a credit card application, but will need to obtain additional information about the applicants independent income. Information concerning the applicant's income or salary, however, may be relied on in order to determine whether the applicant has the ability to make the required payments.
In a letter to de facto CFPB leader Raj Date, the legislators said the CFPB should amend Regulation Z if it finds that these rules are causing any negative effects. House Financial Services Committee Chairman Spencer Bachus (R-Ala.), Rep. Barney Frank (D-Mass.) and Rep. Louise Slaughter (D-N.Y.) were among the letter's 25 co-signors.
The letter notes one unintended consequence of these rules: limiting the ability of stay-at-home spouses to secure new lines of credit. In one case, an issuer said the average line of credit assigned to women was well below the average assigned to men. "In addition, approval rates have declined significantly for women in certain age groups, especially for those 62 and over, who may be particularly likely to rely on the income of other household members," the letter adds.
Maloney said Congress needs to make sure "that women are not subject to credit denials because of a misreading of the law. Nonworking spouses must continue to have access to credit using household income, and the CFPB has the tools to tell if that is happening."
Overall, the CFPB "can look across the credit card issuing industry" to determine any potential negative impacts of the rule, and can collect first-hand stories of financial issues through its consumer complaint collection processes, the letter said. The legislators recommended the CFPB begin this process before the end of the year.
Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said CUNA applauds the lawmakers for requesting the study. "Like these lawmakers, CUNA is also concerned about unintended consequences of this or any other major rulemaking," she added.
For the full letter, use the resource link.