The Federal Reserve Board should consider allowing credit unions more time to meet the implementation deadline for the new credit card law – and Senate Banking Committee Chairman Chris Dodd (D-Conn.) has been asked by the Consumer Federation of America to urge them to do so.

The letter, sent at the request of CUNA, notes CFA’s concern about the new law, particularly “implementation of a provision of the Act that is set to take effect later this month as it affects a very unusual loan product offered by credit unions.” The letter asked Dodd to urge the board to allow credit unions more time to meet the deadline for their open-end loans other than credit cards.

The CFA letter notes that credit union have “identified legitimate implementation difficulties for a complicated and useful product that was not the primary focus of this requirement.”

Additionally, the CFA sent a similar letter to the Fed, also at CUNA’s request, urging it to delay the implementation date.

The provision in the law is set to take effect Aug. 20.

Following is the complete text of CFA’s letter sent to Chairman Dodd:

- - - - - - - - - - - - - - - - - - - - - - -

August 7, 2009
The Honorable Christopher Dodd

SD-534 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Dodd:

The Consumer Federation of America (CFA) commends you for your leadership in enacting the Credit Card Accountability,
Responsibility and Disclosure (CARD) Act (Public Law 111-24). This important new law will make the credit card marketplace fairer and more transparent for consumers.

I would like to bring to your attention one issue CFA is concerned with regarding the implementation of a provision of the Act that is set to take effect later this month as it affects a very unusual loan product offered by credit unions. Section 106 of the Act requires that creditors may not treat a payment on any open end plan as late unless they have adopted reasonable procedures to ensure that periodic statements have been mailed at least 21 days prior to the due date.

As you know, the primary focus of this requirement is to ensure that credit card issuers provide consumers with adequate time to respond to billing statements, in order to make their payment before the due date. It is a very important provision that will help consumers who responsibly pay their bills avoid unjust late payment fees.

The provision will also affect other forms of open end credit, including multifeatured credit plans with sub-accounts that credit unions have been permitted to offer for decades. Many credit unions have developed consolidated statement systems for these sub-accounts, such as automobile loans, but not for their credit card accounts. It is the use of consolidated statements in particular that is apparently causing many credit unions to have a difficult time meeting the implementation deadline for this requirement, which is August 20th.

CFA requests that you urge the Federal Reserve Board to consider allowing credit unions more time to meet this deadline for their open end loans other than credit cards. (We understand that credit unions will be implementing this provision as it pertains to credit cards on time.) We believe that the credit unions have identified legitimate implementation difficulties for a complicated and useful product that was not the primary focus of this requirement. CFA has worked with credit unions closely over the years, and we know that they will make every effort to comply with this provision as quickly as possible.

Thank you for your consideration of this request.

Sincerely,

Travis Plunkett
Legislative Director
Consumer Federation of America