House Republicans gag witnesses against credit card companies

Like so many other Americans, they discovered that their credit card interest rates had skyrocketed without warning and sometimes inexplicably. So on Thursday these citizens were invited to testify before the House Financial Services subcommittee on Consumer Credit, which is considering the The Credit Cardholders’ Bill of Rights (PDF). This legislation would add some significant new consumer protections, such as requiring credit card companies to notify customers at least 45 days in advance of a rate increase.

But Republicans on the committee found a repulsive new way to prevent the witnesses from testifying. At the last minute, the GOP insisted that these victims of arbitrary fee hikes (who'd flown into DC from around the country to tell their stories) had to sign a vaguely worded waver permitting the credit card companies to discuss their credit histories publicly anywhere, anytime.

For four of the five, it was a deal-breaker. Instead of signing the waivers allowing them to testify Thursday, they all sat silently in the audience.

"I didn't want all my ... information out there for just anybody," said Denver's Susan Wones, who saw the interest rate of her JP Morgan Chase card jump from 0 percent to 23 percent in one month last summer, without notification or explanation. "I'm extremely upset I can't talk about this."...

At Thursday's hearing, the first panel was to consist of five card holders who had suffered interest rate hikes or unexplained user fees despite a claimed history of responsible borrowing. The GOP waiver requirement came as a surprise, the witnesses said, not least because it surfaced just one day before the hearing. "I didn't have time to contact a lawyer or anything," Wones said.

In addition, witnesses said they were concerned with the vagueness of the one-sentence waiver language, which offered no limitations on where or when the lenders could discuss their credit histories.

Make no mistake, this Republican stunt had the sole purpose of gagging witnesses who would otherwise have testified about the credit card companies' sharp practices.

It's not unusual for Congress to ask hearing witnesses to sign privacy waivers. When Sen. Carl Levin held a hearing on credit card abuses in the Senate last year, witnesses also signed privacy waivers, but they were designed to allow only the Senate staff to access some of their financial information so they could verify it in advance of the hearing. It was basically for the Senate's own due diligence.

But the waivers that [Marvin] Weatherspoon and the others were asked to sign were far broader, and they were foisted on the witnesses only hours before the hearing. Some of the witnesses didn't get them in advance at all. The credit-card executives, of course, weren’t asked to sign any waivers at all that might allow Congress to actually verify the claims they were making.

Democratic members of the committee protested, and Republicans threatened a bunch of disruptive procedural maneuvers if the waivers weren't signed, so [Rep. Carolyn] Maloney and [Rep. Barney] Frank agreed to put the consumers on ice until some later day, probably in April. Still, score one for the banks. For the moment, they headed off another day of bad press, as without the consumer angle, the media all but ignored yesterday's hearing.

The credit card companies did not dare to prevent the academic witnesses from testifying, however, and one of them, Elizabeth Warren, describes how imbalanced the committee hearing was.

The card issuers were there in full force--complete with an army of lobbyists to pack the audience...While the reps from Cap One, Chase and Bank of America went on for hours about their customer friendly policies and how much value they provided free to consumers, the people who had different stories were never allowed to utter a single word.

Rep. Mark Udall (D – CO) blasted the Republican tactics of intimidation:

Udall...expressed anger later, saying the witnesses were being asked at the eleventh hour to give up too many privacy rights. He said they could have signed more limited privacy waivers earlier if they had been asked.

Instead, it amounted to intimidation, Udall charged.

"In short, I believe the credit card industry used tactics of intimidation today to silence these consumers," Udall said in a written release...

"The truth is that these people weren't allowed to speak because credit card companies don't want their stories to be told," Udall said in the statement. "That is wrong. It is unjust and unfair."

So why the full-court press by the credit card companies? The Democratic bill before the committee would prohibit or limit many unfair billing practices. In particular, it would prevent arbitrary interest rate increases, penalties for those who pay their bills on time, and excessive fees. This diary has further details. The Credit Cardholders’ Bill of Rights is "easily the most major proposed credit card legislation in a long time".

Pretty hard for the credit industry to argue against the legislation on its merits. The best they could manage on Thursday was to threaten darkly that new regulations to check abuses could instead lead to higher rates. Credit card company shill Rep. Mike Castle (R – DE) also argued that legislation is premature because anticipated Federal Reserve regulations "might address these issues" by requiring greater disclosure of the abusive credit card terms.

Chiz, that's about as pathetic an argument against the need for legislation as you could imagine. Thus the desperate need to silence any witnesses who've fallen victim to these common abuses.

So what the heck is wrong with Reps. Maloney and Frank, that they'd allow the Republicans to pull this stunt? Will citizens testifying about the need for health care reform in the future be required to sign waivers permitting their insurers to discuss all their health records in public? In any case, I eagerly await the day when mandatory public disclosure applies in equal measure to the corporations and their hired guns that have such easy access to Congress.