the financial services committee and i think appreciation in the last term of congress of how complicated a subject the whole interchange  issue is over in the judiciary committee when there was an effort made to the retailers problem by allowing them to band together  solution not because i didn't think probably that there were some problems that needed to be addressed but i just didn't think that was the appropriate solution it was the only solution that the judiciary committee could really companies they are credit unions to despite the fact that they issued credit cards have a slightly different position sometimes than the banks and of course they are consumers i think today actually is a very productive thing because one of the concerns i had about what we would going in judiciary was that i didn't think we had had enough hearings k i think we shouldn't be at least exploring that possibility area where in fact it isn't so competitive and the lower cost translate into higher dividends for shareholders why the image you're trying to paint in favor of this bill is a small store competition we don't have those now and the bill will help us thank you very much this panel is excused and we'll ask that you move away as expeditiously as possible we have got the next panel move forward from our complaint hotline i'd like to give you a sample of some of the things we've been hearing about this problem of customer for nineteen years so his minimum payment jumped from two percent to five percent his amount raised going up from a month to over six hundred dollars a month told us we have excellent credit we've done a terrific job our money during your economic conditions and yet this is a terrible good customer a marilyn cardholder contacted us in desperation when her rate more than doubled it went from twelve point four nine to a whopping twenty nine or monthly minimum from an had been late with one payment when her due date was moved back a week from the fourth to the thirtieth being hit with a late but not a one hundred forty percent interest rate hike we happened to intervene on that card holders behalf and ultimately the bank was able to help her but not everyone is that fortunate had the credit card been in effect already her late payment would not have allowed her to more than double and that could have been avoided  must find ways to replenish their coffers on the backs of card holders we think that there is a direct link between some of the indefensible practices and there's no logic in taking a customer who's responsible meeting his monthly whether they are the largest financial institutions in the country or the smallest community banks are working hard to implement the card act as soon as possible the act requires a fundamental change in the credit card marketplace with tumours providing greater control over the terms  f their card card issuers recognizing congress spoken and the changes in how we interact with our customers however while we understand that some members of this committee continue to express concern over actions taken by issuers in the marketplace we in my testimony today i would like to make three basic points first full implementation of the provision of the card act is a practical impossibility but the implementation of that act is an enormous task requiring a completely working of internal operations risk importantly sufficient time the timeframe provided in h r thirty six thirty nine isn't adequate for the task at hand the federal reserve just recently issued an eight hundred page public comment on provisions of the card comments are due in mid first becomes even more difficult when you consider that in some instances propose rules and technological solutions to the challenges posed by the new will take time to develop besides the practical hurdles of speeding up compliance other negative consequences are likely thousands of small community banks that issue credit cards would be negatively impacted by the retailers that offer private label cards in concert with major card issuers run the risk of system failures at the time of the holidays this is due to the inadequate time under the proposed bill to implement and test the systems for changes required significant loss sales retails at a time when merchants typically receive twenty five to forty percent of their annual sales not to mention a substantial customer confusion anger and loss day notice for any rate increase with the right for the consumer to know that provision has already been implemented and went into effect on august twentieth two thousand and nine nearly two months ago thus consumers are already protected in real estate lending and student lending among others most recently the federal reserve board announced an eight hundred forty one page proposal to implement provisions of the credit card accept to go into effect that are a twenty second of next year in short america's credit unions have been asked to handle a seemingly endless number of changes to the lending law these changes are being adopted with only larger commercial banks in mind however the resources of the credit union industry and other small institutions are being stretched to the limit the challenge is further exacerbated by the short compliance deadlines included in the credit card act deadlines made even shorter by the legislation this committee orginally the measures target targeting unscrupulous lenders created operational burdens for an entire industry simply put credit unions will not be able to bring their systems into entire compliance by december first of this year the best argument against a shorter effective date is the consequences of the twenty one day provision included in the credit card act this provision was intended to require lenders to send out credit card statements twenty one days in advance of the payment for their credit card account issue that could have been resolved easily if not for the fact quickly after the bill was signed into law when congress passes legislation to dictate what must be done federal agencies and private industry however are responsible for determining how simply put there needs to be sufficient time when one congress decides what must be done and when industries require to have operational systems in place to accomplish that and equally important is the fact that it would be virtually impossible for the federal reserve to promulgated regulations to meet the december first effect moreover even if the fed could act in time i assure you industry could not we are currently digesting the eight hundred forty one page proposal the bed recently  impossible there seems little reason to move the date forward taken together the card act and the subsequent changes to regulations will create significant changes in the credit card industry customary natural and necessary for lenders to reconsider their own business plan and practices in light of such dramatic changes indeed it would be responsible for management to carry out current practices without considering the long term effect these changes will have on the market yet a shorter effect of it will force many lenders to ignore or discount long term planning for the simple reason that they must devote all of their time and energy to compliance provisions regarding increasing interest rates and changing terms makes sense were considered individually however they will dramatically change the way transparency which should make the market more competitive over time now i do want to take this opportunity to recognize that the long term benefits of the credit card act will depend in large part on what the federal reserve does next especially in its rule changing the terms and moving the target on your own is it less difficult to do that and to change the targets in a direction that comply with acted on the issue of interest rate increases and basically said as of august twentieth of this year that consumers have to get forty five days and they can say no to any rate increase we have heard their concerns about increased rates that won't really be put into practice actually until august fifteen months after an enormous amount of time and we see the kind of damage that has been inflicted that i discussed earlier in my testimony t the credit card act and we feel that it's time to move it up and to be able to take advantage of those protections lastly i just want to point out that while mr clayton the problem is solved from consumer perspective having an opt out is an excellent tool and we're very pleased to have it but if we were all to opt out of every card we have because of it we wouldn't have any credit as core of the bill the part that prevents raising interest rates on outstanding balances and really giving the consumers the benefit of the bargain that they already made isn't going to take effect until february and between those outstanding balances rephrase the question but i'd like to at least get the answer if you would if it's coincidental that interest rates going up at this time to the extent that they have just happens to work this way has nothing to do with the fact that there are some is not coincidental we do have one now something into an explanation to that question if you'd like if not what i'll have to ask you to do is submit it for the record in writing if you what time has expired and the chair will note that some members may have additional questions for the panel this panel as well as others which may be submitted in writing without objection the hearing record will remain open for thirty days for members to submit written question