Supporting America's Volunteer Emergency Services Act of 2008

Mr. President, I know the Senator from Connecticut has to leave, but before he does leave the floor, I congratulate and commend him on this bill. He has put a huge amount of effort into this issue over the years. This bill reflects that effort. His leadership in this matter will make a huge difference in getting this bill enacted. I thank him for that leadership and thank him for this bill.

Mr. President, the legislation we are introducing today is going to combat credit card abuses that have been hurting American consumers for far too long. With all the economic hardship facing Americans today, from falling home prices to rising gasoline and food costs, it is more important than ever for Congress to act now to stop credit card abuses and protect American families from unfair credit card practices.

Credit card companies regularly use a host of unfair practices. They hike the interest rates of cardholders who pay on time and comply with their credit card agreements. They impose interest rates as high as 32 percent. They charge interest for debt that was paid on time. They apply higher interest rates retroactively to existing credit card debt. They pile on excessive fees and then have the gall to charge interest on those fees. They apply consumer payments first to the debt with the least expensive interest rate, saving the higher interest rate debt to be paid off last. And they engage in a number of other unfair practices that are burying American consumers in a mountain of debt. It is long past time to enact legislation to protect American consumers.

The bill we are introducing today will not only help protect consumers, but it will also help ensure that credit card companies willing to do the right thing are not put at a competitive disadvantage by companies continuing unfair practices.

Some argue that Congress does not need to ban unfair credit card practices. They contend that improved disclosure alone will empower consumers to seek out better deals. Sunlight can be a powerful disinfectant, but credit cards have become such complex financial products that even improved disclosure will not be enough to curb the abuses. Some practices are so confusing that consumers cannot easily understand them. Additionally, better disclosure does not always lead to greater market competition, especially when essentially an entire industry is using and benefiting from practices that unfairly hurt consumers.

Credit card issuers like to say they are engaged in a risky business, lending unsecured debt to millions of consumers. But it is clear they have learned to price credit card products in ways that produce enormous profit. For the last decade, credit card issuers have maintained their position as the most profitable sector in the consumer lending field and reported consistently higher rates of return than commercial banks.

In 2006, Americans used 700 million credit cards to buy about $2 trillion in goods and services. The average American family now has five credit cards. Credit cards are being used to pay for groceries, mortgage payments, and even taxes, and they are saddling U.S. consumers, from college students to seniors, with a mountain of debt. The latest figures show that U.S. credit card debt is now approaching $1 trillion. These consumers are routinely being subjected to unfair practices that squeeze them for ever more money, sinking them further into debt.

While the remaining legislative days in this Congress are dwindling, there is still time to enact strong credit card reform legislation. Too many American families are being hurt by too many unfair credit card practices to delay action any longer.

I commend Senator Dodd for tackling credit card reform. I look forward to Congress taking the steps needed this session to ban unfair practices that are causing so much pain and financial damage to American families today.

Credit card abuse is a topic, as Senator Dodd mentioned, with which I have been deeply involved over the past several years through a number of investigations in the Permanent Subcommittee on Investigations. We held two subcommittee hearings in 2007, and based on our investigative hearings, I introduced legislation called the Stop Unfair Practices in Credit Cards Act, S. 1395, to ban the outrageous credit card abuses that were documented in the hearings. I was pleased that Senators McCaskill, Leahy, Durbin, Bingaman, Cantwell, Whitehouse, Kohl, Brown, Stevens, and Sanders, our Presiding Officer, joined as cosponsors.

This new bill, the Dodd-Levin bill introduced today, as Senator Dodd mentioned, incorporates almost all the provisions of S. 1395, and it adds other important protections as well. It is the strongest credit card bill yet in Congress.

I would like to add to the record more detailing of the provisions of this bill, along with an overview of some of the most prevalent abuses that we uncovered and some of the stories that American consumers shared with us during the course of the inquiries carried out by my Permanent Subcommittee on Investigations.

With regard to excessive fees, the first case history we examined illustrates the fact that major credit card issuers today impose a host of fees on their cardholders, including late fees and over-the-limit fees that are not only substantial in themselves but can contribute to years of debt for families unable to immediately pay them.

Wesley Wannemacher of Lima, OH, testified at our March 2007 hearing. In 2001 and 2002, Mr. Wannemacher used a new credit card to pay for expenses mostly related to his wedding. He charged a total of about $3,200, which exceeded the card's credit limit by $200. He spent the next 6 years trying to pay off the debt, averaging payments of about $1,000 per year. As of February 2007, he had paid about $6,300 on his $3,200 debt, but his billing statement showed he still owed $4,400.

How is it possible that a man pays $6,300 on a $3,200 credit card debt, but still owes $4,400? Here is how. On top of the $3,200 debt, Mr. Wannemacher was charged by the credit card issuer about $4,900 in interest, $1,100 in late fees, and $1,500 in over-the-limit fees. He was hit 47 times with over-limit fees, even though he went over the limit only three times and exceeded the limit by only $200. Altogether, these fees and the interest charges added up to $7,500, which, on top of the original $3,200 credit card debt, produced total charges to him of $10,700.

In other words, the interest charges and fees more than tripled the original $3,200 credit card debt, despite payments by the cardholder averaging $1,000 per year. Unfair? Clearly, I think, but our investigation has shown that sky-high interest charges and fees are not uncommon in the credit card industry. While the Wannemacher account happened to be at Chase, penalty interest rates and fees are also employed by other major credit card issuers.

The week before the March hearing, Chase decided to forgive the remaining

debt on the Wannemacher account, and while that was great news for the Wannemacher family, that decision doesn't begin to resolve the problem of excessive credit card fees and sky-high interest rates that trap too many hard-working families in a downward spiral of debt.

These high fees are made worse by the industry-wide practice of including all fees in a consumer's outstanding balance so that they incur interest charges. It is one thing for a bank to charge interest on funds lent to a consumer; charging interest on penalty fees goes too far.

Another galling practice featured in our March hearing involves the fact that credit card debt that is paid on time routinely accrues interest charges, and credit card bills that are paid on time and in full are routinely inflated with what I call ``trailing interest.'' Every single credit card issuer contacted by the Subcommittee engaged in both of these unfair practices which squeeze additional interest charges from responsible cardholders.

Here is how it works. Suppose a consumer who usually pays his account in full, and owes no money on December 1, makes a lot of purchases in December, and gets a January 1 credit card bill for $5,020. That bill is due January 15. Suppose the consumer pays that bill on time, but pays $5,000 instead of the full amount owed. What do you think the consumer owes on the next bill?

If you thought the bill would be the $20 past due plus interest on the $20, you would be wrong. In fact, under industry practice today, the bill would likely be twice as much. That is because the consumer would have to pay interest, not just on the $20 that wasn't paid on time, but also on the $5,000 that was paid on time. In other words, the consumer would have to pay interest on the entire $5,020 from the first day of the new billing month, January 1, until the day the bill was paid on January 15, compounded daily. So much for a grace period. In addition, the consumer would have to pay the $20 past due, plus interest on the $20 from January 15 to January 31, again compounded daily. In this example, using an interest rate of 17.99 percent, which is the interest rate charged to Mr. Wannamacher, the $20 debt would, in one month, rack up $35 in interest charges and balloon into a debt of $55.21.

You might ask--hold on--why does the consumer have to pay any interest at all on the $5,000 that was paid on time? Why does anyone have to pay interest on the portion of a debt that was paid by the date specified in the bill--in other words, on time? The answer is, because that is how the credit card industry has operated for years, and they have gotten away with it.

There is more. One might think that once the consumer gets gouged in February, paying $55.21 on a $20 debt, and pays that bill on time and in full, without making any new purchases, that would be the end of it. But you would be wrong again. It's not over.

Even though, on February 15, the consumer paid the February bill in full and on time--all $55.21--the next bill has an additional interest charge on it, for what we call ``trailing interest.'' In this case, the trailing interest is the interest that accumulated on the $55.21 from February 1 to 15, which is time period from the day when the bill was sent to the day when it was paid. The total is 38 cents. While some issuers will waive trailing interest if the next month's bill is less than $1, if a consumer makes a new purchase, a common industry practice is to fold the 38 cents into the end-of-month bill reflecting the new purchase.

Now 38 cents isn't much in the big scheme of things. That may be why many consumers don't notice these types of extra interest charges or try to fight them. Even if someone had questions about the amount of interest on a bill, most consumers would be hard pressed to understand how the amount was calculated, much less whether it was incorrect. But by nickel and diming tens of millions of consumer accounts, credit card issuers reap large profits.

I think it is indefensible to make consumers pay interest on debt which they pay on time. It is also just plain wrong to charge trailing interest when a bill is paid on time and in full.

My subcommittee's second hearing focused on another set of unfair credit card practices involving unfair interest rate increases. Cardholders who had years-long records of paying their credit card bills on time, staying below their credit limits, and paying at least the minimum amount due, were nevertheless socked with substantial interest rate increases. Some saw their credit card interest rates double or even triple. At the hearing, three consumers described this experience.

Janet Hard of Freeland, MI, had accrued over $8,000 in debt on her Discover card. Although she made payments on time and paid at least the minimum due for over 2 years, Discover increased her interest rate from 18 percent to 24 percent in 2006. At the same time, Discover applied the 24 percent rate retroactively to her existing credit card debt, increasing her minimum payments and increasing the amount that went to finance charges instead of the principal debt. The result was that, despite making steady payments totaling $2,400 in 12 months and keeping her purchases to less than $100 during that same year, Janet Hard's credit card debt went down by only $350. Sky-high interest charges, inexplicably increased and unfairly applied, ate up most of her payments.

Millard Glasshof of Milwaukee, WI, a retired senior citizen on a fixed income, incurred a debt of about $5,000 on his Chase credit card, closed the account, and faithfully paid down his debt with a regular monthly payment of $119 for years. In December 2006, Chase increased his interest rate from 15 percent to 17 percent, and in February 2007, hiked it again to 27 percent. Retroactive application of the 27 percent rate to Mr. Glasshof's existing debt meant that, out of his $119 payment, about $114 went to pay finance charges and only $5 went to reducing his principal debt. Despite his making payments totaling $1,300 over 12 months, Mr. Glasshof found that, due to high interest rates and excessive fees, his credit card debt did not go down at all. Later, after the Subcommittee asked about his account, Chase suddenly lowered the interest rate to 6 percent. That meant, over a one year period, Chase had applied four different interest rates to his closed credit card account: 15 percent, 17 percent, 27 percent, and 6 percent, which shows how arbitrary those rates are.

Then there is Bonnie Rushing of Naples, FL. For years, she had paid her Bank of America credit card on time, providing at least the minimum amount specified on her bills. Despite her record of on-time payments, in 2007, Bank of America nearly tripled her interest rate from 8 to 23 percent. The bank said that it took this sudden action because Ms. Rushing's FICO credit score had dropped. When we looked into why it had dropped, it was apparently because she had opened Macy's and J.Jill credit cards to get discounts on purchases. Despite paying both bills on time, the automated FICO system had lowered her credit rating, and Bank of America had followed suit by raising her interest rate by a factor of three. Ms. Rushing closed her account and complained to the Florida attorney general, my subcommittee, and her card sponsor, the American Automobile Association. Bank of America eventually restored the 8 percent rate on her closed account.

In addition to these three consumers who testified at the hearing, the subcommittee presented case histories for five other consumers who experienced substantial interest rate increases despite complying with their credit card agreements.

I would also like to note that, in each of these cases, the credit card issuer told our subcommittee that the cardholder had been given a chance to opt out of the increased interest rate by closing their account and paying off their debt at the prior rate. But each of these cardholders denied receiving an opt-out notice, and when several tried to close their account and pay their debt at the prior rate, they were told they had missed the opt-out deadline and had no choice but to pay the higher rate. Our subcommittee examined copies of the opt-out notices and found that some were filled with legal jargon, were hard to understand, and contained procedures that were hard to follow. When we asked the major credit card issuers what percentage of persons offered an opt-out actually took it, they told the Subcommittee that 90 percent did not opt out of the higher interest

rate--a percentage that is contrary to all logic and strong evidence that current opt-out procedures do not work.

The case histories presented at our hearings illustrate only a small portion of the abusive credit card practices going on today. Since early 2007, the subcommittee has received letters and e-mails from thousands of credit card cardholders describing unfair credit card practices and asking for help to stop them, more complaints than I have received in any investigation I have conducted in more than 25 years in Congress. The complaints stretch across all income levels, all ages, and all areas of the country.

The bottom line is that these abuses have gone on for too long. In fact, these practices have been around for so many years that they have, in many cases, become the industry norm, and our investigation has shown that many of the practices are too entrenched, too profitable, and too immune to consumer pressure for the companies to change them on their own.

Mr. President, in summary, this is what our bill contains:

No interest on debt paid on time.

The bill prohibits interest charges on any portion of credit card debt which the credit card holder paid on time during the grace period.

The bill prohibits credit card issuers from increasing interest rates on cardholders who are in good standing for reasons unrelated to the cardholder's behavior with respect to that card.

The bill requires increased interest rates to apply only to future debt and not to debt incurred prior to the increase.

The bill prohibits the charging of interest on credit card transaction fees, such as late fees and over-the-limit fees.

The bill prohibits the charging of repeated over-the-limit fees for a single instance of exceeding a credit card limit.

The bill requires payments to be applied first to the credit card balance with the highest rate of interest and to minimize finance charges.

The bill requires the credit card issuers must offer consumers the option of operating under a fixed credit card limit that cannot be exceeded.

The bill prohibits charging a fee to allow a credit card holder to make a payment on credit card debt, whether that payment is by mail, telephone, electronic transfer, or otherwise. Believe it or not, many credit card companies actually charge you a fee to make your payment.

The bill contains some of the following provisions as well:

It requires issuers to lower penalty rates that have been imposed on a cardholder after 6 months if the cardholder commits no further violations.

The bill gives each Federal banking agency the authority to prescribe regulations governing unfair or deceptive practices by banks and savings and loan institutions.

The bill requires issuers to provide individual consumer account information and disclose the total period of time and interest it will take to pay off the credit card balance if only minimum monthly payments are made.

And, as the Senator from Connecticut said, the bill contains a number of protections for young consumers from credit card solicitations.

Again, I commend Senator Dodd for taking the leadership on this issue. As chairman of the Senate Banking Committee, his leadership will make a huge difference. It gives us a real chance of passing reform legislation relative to credit card abuses this session of the Congress.

Mr. President, I yield 4 minutes to my friend, the Senator from Alabama.

Mr. President, first let me thank my colleague from Alabama, Senator Shelby. He makes it sound like Methuselah this morning referring to those years we have served together in the Senate, combined years of service. I have been a member of the Banking Committee since my first day as a Member of this body in January of 1981. I have served under and with a lot of different people on that committee, going back to Bill Proxmire of Wisconsin, who was the ranking Democrat in those days; Jake Garn, who was the chairman of the Banking Committee in 1981, the Senator from Utah. Over the years, Senator Riegle, Phil Gramm, and Paul Sarbanes, of course, chaired the committee, as well as, of course, Senator Shelby.

This is an important moment for this body. We have a severe housing crisis in the country. I don't need to keep repeating that. All Members recognize it. When we go home and talk to our constituents, as we did over the last week or so, we see that this problem is not going away. We were hoping that somehow the market would be taking care of all of this and by now we would be seeing that proverbial light at the end of the tunnel, but the only light we see is the light of a train coming. Unless we act promptly, we are looking at a situation that will only get worse.

Our legislation is not the salvation of every problem. I wish to make clear to my colleagues that what Senator Shelby and I and the other 19 members of our committee have done is to fashion some proposals that we think will make a significant contribution to the issue, maybe the most important one being a sense of optimism and confidence that this Congress of ours, despite the narrow margins that split us as two parties in this body, can actually work together to get something done.

There is a growing fear in the country--in fact, more than growing-- that we are incapable of doing much here; that we can't seem to get much done because of the partisan divide. This bill argues strenuously against that conclusion. By a vote of 19 to 2, this committee marked up this piece of legislation.

We have now been on the Senate floor debating this because of the very difficult parliamentary situation we are presented with as a result of what the House of Representatives sent us, so we have spent this much time on this legislation. However, I think we have a very good product reflected by the votes that have occurred over the last several weeks. I think the lowest vote total on any single proposal that has been either offered or suggested has been something like 77 votes, showing that an overwhelming majority of people are supporting this committee product, and we appreciate that as members of the Banking Committee.

So this action is coming none too soon. Today the RealtyTrac reported that over 250,000 families went into foreclosure in the month of June. That is a 53-percent increase over last year. We all throw these statistics around rather easily in this Chamber, but numbers, while staggering, are faceless and nameless. Behind every one of these numbers, that 250,000, that 53-percent increase, is a mother, is a father, is a family, and children whose lives have been unalterably changed for the worse because they are going to lose their home. They are going to lose their home.

Just imagine, if you will, those who have not been in that situation, what it would be like to wake up this morning and know that you have a foreclosure notice on your home, that you can't meet your obligations and you have to face your children, you have to face your spouse, you have to face your coworkers, and you have to find some other place to live. Mr. President, 250,000 people went through that in the month of June, 1,500,000 over the last year, and we are still here debating this bill and whether we can do anything to make a difference in people's lives.

What is happening today is a tragedy, a significant tragedy for these people, for their neighbors, for their communities, and for our country. The cover story in this week's issue of Business Week is entitled ``The Home Price Abyss: Why the Threat of a Free Fall is Growing.'' I think the article sums up very well the threat we are trying to address with this legislation.

Let me quote from it:

The risk to the financial system and the economy is that

the price drop, which is already horrifying, will start

feeding on itself.

It goes on to say:

When home values fall low enough, hard-pressed homeowners

become less able or less willing to keep paying their

mortgages. That forces lenders to repossess homes and then

dump them back on the market at fire sale prices, which

depresses further the prices in those neighborhoods and leads

to even more foreclosures.

When we consider the role home equity has played in supporting consumer spending, we can see that this vicious cycle can create a disaster. We have already had hundreds of thousands of job losses and the like. I think we all recognize we have a responsibility to act.

Today, we have an opportunity to pass the Housing and Economic Recovery Act of 2008, which will help us begin to address this crisis and the larger economic turmoil. I wish to add that we would have liked to have considered other amendments. Other colleagues had ideas to add to this bill. Because of a handful of Members who don't want any more consideration, we are forced into this situation. A number of amendments had been worked out between Democrats and Republicans, but we cannot even offer those. That is the situation. I regret that because there were some good ideas, frankly, that could have been added to the bill as it leaves here. But that is the situation. Candidly, we cannot wait longer, having gone weeks going through the parliamentary rigmarole on the floor of the Senate.

I will sum up again the legislation we are about to pass and send on to the House. The bill establishes the Hopeful Homeowners Act to assist at least 400,000, maybe 500,000 families to keep their homes and stabilize their neighborhoods. It does so after asking both lenders and borrowers to make financial sacrifices. It does so at absolutely no cost to the taxpayer. It creates a new class of regulation for Fannie Mae and Freddie Mac.

You can look in the Wall Street Journal of this morning if you doubt whether we should act or we can wait longer. The headline is: ``U.S. Mulls Future of Fannie, Freddie.'' If you think we ought to wait longer to try to get something better out of the bill, consider what we may have happen to these GSEs, which are critical to providing stability in the housing market. The world-class regulator, which is something we tried to do over the last 7 years, is finally done in this bill on a bipartisan basis. Recent news makes it clear these entities need a strong regulator to ensure they are viable and healthy institutions.

The bill raises the loan limit from $417,000 to as high as $625,000, so the GSEs can play a more active role in stabilizing the housing market. I wish to point out that this loan limit is considerably higher than what was included in the committee-passed bill. Senator Shelby, to his credit, and I agreed to do this in an effort to accommodate the interest of the other body, the House. And also the people who live in higher cost States, the higher numbers will be important for them to get relief as well from the bill.

Treasury Secretary Paulson said passing this legislation is the most important thing we can do to address the housing crisis. The bill modernizes the FHA program, raising the loan limit from $362,000 to $625,000. The FHA proved its value in the current crisis. It continues to be a stable source of mortgage credit, while many other lenders have failed. This bill will make sure FHA is available to even more American families.

To give you some idea of how this affects people, by raising these limits to the $625,000 level from $417,000, we will now cover 85 percent of the American population and 98 percent of the counties in America. The other 2 percent are the very high-cost counties. My

State has one of them, and several other States across the country do as well. But 85 percent of the American people are potentially covered by this bill, and 98 percent of the counties will be covered by the numbers we have raised from $417,000 to $625,000. When people tell you we are not reaching enough, we have reached about as far as you can reach if you are interested in helping those who may face more serious problems.

The bill includes a permanent affordable housing fund, financed by Fannie Mae and Freddie Mac, that will provide tens of thousands of affordable housing units in the future. Let me say, about this part of the bill, the GSE reform will be long lasting and important. The HOPE for Homeowners Act is temporary; it doesn't exist after 3 or 4 years. Maybe the most important thing we will do is the affordable housing issue in this bill. No new tax money required. The money will come out of the GSEs. We know, as a matter of fact, that we have built very few affordable housing units in this country over the last number of years. And particularly those people losing their homes will have a hard time finding rental units. This is a permanent bill on affordable housing, and there is a means to pay for it without adding to the taxpayers' costs. It is one of the most important long-lasting features of the bill. In the long term, that bill will make a huge difference for millions of people.

Seventeen million people today spend half their disposable income on their houses. If you are on SSI, in fact, housing costs exceed the monthly benefits you get today under SSI. For millions of people in this country, that affordable housing provision can be very important in the long term.

The bill includes a new protection for elderly homeowners taking out FHA-insured reverse mortgages so they are not deceived into using the proceeds from the loans to buy expensive and needless insurance products. These are provisions that were incorporated by Senator McCaskill, and we thank her for it. There is a new mortgage broker and lender licensing requirement that was added by Senator Martinez and supported by Senator Feinstein from California. That will begin to address many of the abuses of the mortgage process that have been perpetrated by brokers.

In addition, the bill includes improved disclosure requirements that were added by Senator Reed of Rhode Island and Senator Bond of Missouri as well. Because of the effort of Senators Kerry, Coleman, Akaka, Cornyn, and Sanders, the bill expands the availability of VA housing programs. It includes a number of provisions to help returning veterans save their homes from foreclosure and provides new housing benefits to disabled vets as well.

In an amendment adopted on the floor prior to the recess, we added language by Senator Kohl of Wisconsin to create protections against foreclosure scams, and we reduced paperwork burdens on certain small public housing authorities, thanks to the amendment by Senator Sununu.

This legislation includes $3.9 billion in emergency community development block grant funds. This is a controversial provision. I know some Members have raised concerns about it. I think all of us recognize that when we talk about a national crisis, with problems of foreclosures having a devastating effect in our States, obviously, resources locally, with property taxes declining for police and fire, and the like, our mayors and county officers are finding themselves further hard-strapped to meet their obligations. We thought an infusion of community development block grant money, targeted specifically to those communities that face high foreclosure rates, would be of benefit to them to help them rehabilitate their communities and the foreclosed homes and get them back on the market. This is still in the bill.

I have been warned by Members of the other body that this provision will have to come out. I know some Members want to strike it. It is going to stay in the bill that is going to the other body. They object to it because they don't have a pay-for in it, and we do here. We call it emergency funding, as we do when we have hurricanes or other natural disasters occurring. This is similar to a natural disaster. If you are one of those 250,000 families who, in the month of June, lost their homes--whether by flood or by hurricane, believe me, it is a disaster. They lost it because they got lured into deals they could not afford or because there was a scam or deceptive practices going on. Don't try to tell that family they have not faced a disaster. It is not a natural one, but nonetheless it is a disaster. The idea that we cannot provide additional funding to mayors and county executives to help out communities is something I am troubled by. It may come out of the bill when it comes back. I urge them to look hard at this and try to find a funding source.

I ask unanimous consent for an additional 5 or 10 minutes.

I will yield that time to my colleague from New Jersey.

Mr. President, my friend and colleague from Michigan is here, as well, who has been deeply involved in the issue of credit cards and the problems that are occurring.

I rise with my colleague Senator Levin to introduce legislation that would reform and prohibit credit card practices that harm rather than help American consumers and their families. The legislation is called the Credit Card Accountability, Responsibility and Disclosure Act, or the Credit CARD Act. It will, in my view, help bring an end to industry practices that candidly cost American families billions of dollars each and every year.

I cannot think of a better time to introduce this much needed legislation. This Chamber will, in very short order this evening, or as late as tomorrow, pass legislation to address the most important issue confronting our Nation's economy and the financial stability of our citizens--the collapse of the subprime housing market and the credit crisis it has brought about.

Unfortunately, far too many American families who are already being squeezed by the rising cost of food, oil, and gas, now find themselves forced to rely on short-term, high-interest credit card debt to finance life's daily necessities--including their mortgage payments--because of the ongoing credit crisis and a weak economy.

That growing reliance was highlighted in a report released last week by the Federal Reserve. The Fed's study reported that in May, revolving consumer debt, which is primarily credit card debt, reached an all-time record high of slightly over $961 billion. That is a 7-percent increase in the last month alone, which is on top of a 7-percent increase last year, and a 6-percent increase in 2006. At this rate, revolving consumer debt in our country, which is again primarily credit card debt, will

reach $1 trillion by the Christmas season of this year.

When I assumed the gavel of the Senate Banking Committee last January, one of the very first hearings I held was on the issue of credit card practices. At that hearing, I challenged card issuers, banks, and associations to stop engaging in practices that they were not prepared to defend before the committee.

It was my hope that the hearing and that warning would encourage the credit card industry to go through a period of intense self- examination. I had hoped the industry would scrutinize its practices and policies to ensure that credit was extended in the fairest and most transparent of terms to credit card customers. To be fair, some in the industry heeded that call. I applaud them and thank them for their efforts. Over the past year, a few credit card companies have voluntarily made changes to the way they do business, and many Americans have benefitted from those improvements.

Regrettably, however, far too few embraced this call. Even more regrettably, some that have made voluntary changes are reconsidering those steps in the face of mounting pressure to find new streams of revenue and capital, and to compete in a market where other industry participants are not engaging in these reforms, as their subprime mortgage market-related losses continue to rise. The temptation to go back to older practices to increase revenue streams is there. Unfortunately, the use of confusing, misleading, and very predatory practices, in some cases, appears likely to remain the standard operating procedure for many in the credit card industry for the foreseeable future if we fail to act. The list of these troubling practices is lengthy: Charging predatory rates and fees; engaging in deceptive marketing to young people; practices such as universal default; double-cycle billing; retroactive interest rate increases; ``any time, any reason'' repricing; and billings shenanigans--like shortening the period consumers have to pay their bills, or charging fees for payment by telephone--are just a few of the practices that could merit induction into a fairly crowded industry ``hall of shame.''

Even the financial regulators, whom I have been openly critical of for lack of appropriate oversight and response throughout the subprime mortgage market crisis, have recognized the harm these sinister practices pose not only to credit card customers but to our economy as well. In May of this year, the Federal Reserve, the Office of Thrift Supervision, and the National Credit Union Administration proposed rules aimed at curbing some of the very practices I have identified. In my view, this joint rulemaking is an important step in providing needed consumer protections in some areas, including a ban on retroactive interest rates and rules on payment allocation. But the proposed rules fall far short in other important areas--failing to address issues including universal default, ``any time, any reason'' repricing, multiple over-limit fees, and youth marketing.

These shortcomings underscore the need for the legislation Senator Levin and I will be talking about this evening.

I want to make it very clear--and I know my colleague feels the same way--that we are not opposed to credit cards. They are very valuable, very useful tools for consumers. So this bill is not designed in any way to deprive consumers of the use of credit cards. That is not the issue. When provided on fair terms, and used wisely and responsibly, credit cards are a valuable financial tool for millions of our fellow citizens. They can help an individual to build his or her credit history and to better pursue his or her financial goal.

But like many credit products, credit cards pose the potential to harm consumers as well as help consumers. Card companies have been far too apt to exploit the needs of consumers who are increasingly becoming ``hooked on plastic.'' That potential to harm consumers has grown in recent years as credit card usage has risen. Let me share some numbers with you to give you some idea of what has happened in this explosion of credit card usage by Americans.

Today, nearly 75 percent of American households have a credit card or a debit card, and 700 million credit cards are used to purchase in excess of $2.4 trillion in goods and services from over 7 million locations in the United States annually. In 1970, only about 16 percent of U.S. households used credit cards, and fewer than a million businesses accepted them.

As Americans have become increasingly reliant on credit cards, credit card companies have become more and more innovative in finding ways to access their customers. Over $17 billion in credit card penalty fees have been charged to the American people--new fees--in the last 2 years, since 2006. That is a tenfold increase from what was charged 10 years ago. That is $17 billion in new penalties and fees since 2006. Credit card companies are turning to innovative ways to profit-- including at the gasoline pump. They are laying on fees to gas station owners for each credit card transaction made at the pump. At the very time they are watching the price of gasoline skyrocket, the credit card companies are gouging the people struggling to meet those fees. Again, card companies are laying on fees to gas station owners for each credit card transaction made at the pump--a charge that those owners immediately pass on to customers, increasing the cost of gas for drivers. In some places, these fees can add an average of 3 percent for each gasoline transaction.

The combination of the growing needs for revolving debt and hidden fees charged by card companies is contributing to the avalanche of debt under which American consumers increasingly find themselves buried. Listen to this number, because this is the one that is stunning. To give you an idea of what has happened to the average family in this country with credit card balances, today the average household that carries a credit card balance owes close to $10,000 in revolving debt on their credit cards. The average family has a balance of $10,000 in revolving debt on their credit cards.

That is a millstone around the neck of the average American and their families--families that are already struggling to make ends meet and are under pressure from rising gas prices, food prices, skyrocketing health care costs, and a mortgage crisis that has robbed many families of their home equity or, worse yet, their homes.

That is why we are introducing the Credit CARD Act. This bill will help reform credit card practices that drag so many American families further and further into debt. It strengthens regulation and oversight of the credit card industry and prohibits the unfair and deceptive practices that in far too many instances work to harm, not help, a consumer's efforts to move up the economic ladder.

Specifically, the CARD Act would prohibit the worst of the industry's practices, including imposition of excessive fees; retroactive rate increases; universal default; ``any time, any reason'' changes to credit card agreements; and unfair payment allocation.

The bill also, importantly, contains a number of provisions aimed at protecting young consumers.

This legislation builds on legislation I have introduced in previous Congresses. It also incorporates several key concepts included in the legislative proposals put forth by some of my colleagues, notably my colleague from Michigan, Senator Levin, and Senators Menendez, McCaskill, and Obama. Each is an important cosponsor of this legislation, as are Senators Reed of Rhode Island, Akaka, Tester, Clinton, Kerry, Sanders, Whitehouse, and Casey.

This bill also has the support of a wide array of consumer advocates and labor organizations, including the Consumer Federation of America, Consumers Union, National Consumer Law Center, the National Council of La Raza, Service Employees International Union, the Center for Responsible Lending, U.S. PRIG, Consumer Action, Demos, Connecticut PRIG, and the National Association of Consumer Advocates.

As policymakers, we should expect consumers will act responsibly when it comes to using credit cards, and that should be an important point to make. But we also expect no less when it comes to companies that issue these cards. They need to act responsibly, and they are not, in my view. The Credit CARD Act will help strike the

correct balance of responsibility between credit card users and the card issuers. And by striking that balance, it will help provide American consumers with a fair chance to secure economic security for them and their families.

I thank Senator Levin and others--especially Senator Levin who already held hearings on this issue. We have talked about this at length over the years. We tried in other Congresses with very modest proposals to deal with some of these problems. We have always lost those battles. But I think the American consumers, regardless of their income, regardless of their social or economic status, feel very angry about what is happening to them. As a result, I think there is a growing opportunity for us to get something done on this issue.

So while our focus today has been on foreclosure issues, the credit card problem in this country that so many Americans are facing is one that I think is ripe for congressional action. Our hope and intention is to bring a bill to the floor of this Chamber before we adjourn for the year to give our colleagues a chance to express themselves on this issue.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

I thank my colleague.

Mr. President, I am pleased that we are at last moving closer to enactment of much-needed housing legislation.

The foreclosure situation in my State of Michigan continues to be dire. In 2007, there were more than 103,000 foreclosures. According to the data released recently by RealtyTrac, there were nearly 13,000 Michigan foreclosure filings in May alone, a 25 percent increase from the previous month. That is one foreclosure filing for every 353 households, which puts our State's foreclosure rate at the fifth highest in the Nation. Nationwide, filings are up nearly 50 percent compared to this time last year, with one in every 483 U.S. households receiving a foreclosure filing in May.

Sadly, we all know that homeowners facing foreclosure are not the only ones being impacted by this crisis. Property values have plummeted in many areas, due in part to the glut of abandoned and foreclosed homes. Lost property values moreover translate into decreased State and local revenue from property taxes, creating a shortfall in revenues and reducing the budget available for valuable State and local programs and services.

Our Nation's broader economic woes can also be traced back, at least in part, to the foreclosure crisis. There is a long chain of investors, lenders, and financial markets relying on American homebuyers to pay what, in many instances, are shaky home loans. Because of the record defaults on these loans, credit remains tight.

Throughout this crisis I have received wise counsel from many experts on foreclosure prevention and housing matters. Earlier this year I hosted a series of roundtable meetings in Michigan communities with leaders from local and State government, as well as organizations who are in the trenches working with families facing foreclosure, to discuss practical ways to help homeowners and protect our economy from further damage. Many of the ideas discussed at those roundtables are included in this legislation.

I have also had the benefit of advice from Bernie Glieberman, chairman of the board of the Michigan State Housing Development Authority, and member of the board of the Michigan Housing Trust Fund and Harvard University's Joint Center for Housing Studies policy advisory board. Long before the committees started crafting this housing bill, Bernie brought to my attention the idea of increasing tax-exempt bonding authority to enable State housing agencies to help struggling homeowners acquire more affordable mortgages. I am pleased that this bill will bring this additional bonding authority to fruition. I am confident that the Michigan State Housing Development Authority, MSHDA, and other State housing agencies across the Nation will put it to good use. These tax-exempt bonds will help agencies like MSHDA raise the funds needed to refinance homeowners from adjustable rate mortgages into affordable fixed-rate mortgages, as well as provide loans for first-time homebuyers and finance the construction of multi- family residential housing.

This bill has a number of other provisions that will help alleviate the suffering caused by the foreclosure crisis. Arguably the most important provision in this bill is the HOPE for Homeowners program, which will enable the Federal Housing Administration to provide groundbreaking new refinancing options to distressed borrowers. Through this temporary new program, the Federal Housing Administration, FHA, is authorized to insure up to $300 billion in 30-year, fixed-rate mortgages. I applaud the work of Senator Dodd and others of our colleagues in putting this FHA refinancing proposal together. It is based on the successful Home Owner's Loan Corporation that was implemented by President Franklin Roosevelt during the Great Depression to issue new loans to help homeowners in default.

It is important to note that this new program is not an investor or lender bailout. FHA will only insure loans at 90 percent of the current property value, which in most cases is significantly less than the original loan amount. Investors and lenders who choose to take advantage of this program must, therefore, be willing to take a hit. They will likely be willing to take this loss, however, because it will be less than the losses associated with foreclosure. Also, this is hardly a windfall for distressed borrowers, as some are claiming. Those who sign up for the FHA insured loans will share their new equity and future appreciation with FHA by paying a premium--3 percent initially, 1.5 percent annually thereafter--for the FHA loan. They are also required to give a portion of the

equity from sale proceeds for this home back to FHA. I am pleased to note that this program, which is estimated to help nearly 400,000 homeowners nationwide, will not cost taxpayers money; in fact, it is expected to net $250 million.

Not only does this bill take significant steps to help keep families in their homes, it provides immediate help toward rehabilitating blighted neighborhoods. The nearly $4 billion in CDBG-like funding provided through this bill will go to areas of the country with the highest foreclosure rates and number of filings. Michigan stands to receive almost $170 million through this provision, and the funds could be used to restore an estimated 6,000 properties. Inclusion of these neighborhood stabilization funds will help protect more homeowners from going ``underwater,'' and I urge Members in the House to support keeping this provision in the final bill.

Our economic crisis is exacerbated further by the fact that we are a nation at war. Our brave and dedicated soldiers should not have to return to U.S. soil to find that, facing foreclosure action, they no longer have a home. I am pleased that this bill will delay foreclosure action for returning soldiers and also provide them 1 year of relief from increases in mortgage rates. The bill also provides additional homeownership opportunities for veterans through increases in the VA loan guarantee amount. There is also funding for home modifications for veterans with service-related disabilities.

In addition to the provisions in this bill that help alleviate the suffering of the many families in dire straits, this legislation will help stimulate the slumping housing market and help to ease the broader economic slowdown.

One key provision of this bill is a 1-year, $8,000 tax credit available for first-time homebuyers. The homebuyer would repay the money over time, similar to an interest-free loan. I have heard from realtors, prospective buyers, home builders and many others who believe this would help reduce the existing stock of vacant housing.

The availability of quality, affordable housing is critical to the economic health of America. This legislation would help create additional affordable rental housing and increased homeownership opportunities for low-income families by creating a new Housing Trust Fund and a Capital Magnet Fund. These funds, which would be provided as grants to States, would greatly help those who need it most because the funds are required to be used primarily for the benefit of low-income families. The bill also provides incentives to spur development of affordable housing property by the private sector through increases to current programs such as the Low Income Housing Tax Credit.

It is not enough to simply alleviate the Nation's present suffering and get us back on track for the time being. Congress has a responsibility to do what it can to ensure that a housing crisis of this sort does not happen again. To that end, this bill contains a number of provisions aimed at helping homeowners avoid foreclosure and reforming major Federal players in the housing market: the Federal Housing Administration and the housing government-sponsored enterprises, including Fannie Mae and Freddie Mac.

As I observed during the roundtable discussions I hosted in Michigan, many counselors are doing good work on the ground to try and help families avoid foreclosure. However, foreclosure prevention counselors are overwhelmed, and a lack of funds is tying the hands of local groups trying to help keep families on track. This bill would provide $150 million for pre-foreclosure counseling and $30 million for legal services to help keep people in their homes.

This bill also establishes a new, independent regulator for the housing Government Sponsored Enterprises, GSEs, Fannie Mae and Freddie Mac. Through capital standards, audits and other internal controls, this regulator will oversee the safety and soundness of these financial giants who play such a key role in our housing markets.

I am pleased that this bill also incorporates long-awaited legislation to modernize and expand the Federal Housing Administration. These reforms will help provide access to homeownership to families in higher cost areas who have not been able to take advantage of the FHA program in the past, by raising the FHA loan limit. It will also provide counseling for first-time homebuyers as well as homeowners who are having trouble making their mortgage payments through FHA, and improve the FHA loss mitigation process to help struggling homeowners stay in their homes.

Finally, many blame predatory lending practices, at least in part, for the excessive number of irresponsible loans made to subprime borrowers. In response, this bill amends the Truth in Lending Act, TILA, to, among other things, require that borrowers be informed of the maximum monthly payments possible under their loan, and ensure full disclosures are provided no later than 7 days before closing so borrowers can shop for another loan if they are dissatisfIed with the terms. In order to discourage unscrupulous behavior, statutory damages for TILA violations have been increased 10-fold, from current rates of $200 and $400 to $2,000 and $4,000, respectively.

I support this comprehensive housing legislation, and am confident that, once enacted, it will provide much-needed relief to many struggling homeowners in Michigan and across the country. Addressing the foreclosure crisis will require a team effort among Federal, State, and local governments, community and neighborhood organizations, and lenders, brokers, and borrowers. This bill recognizes that fact. It provides an opportunity to help keep struggling families in their homes. It provides an opportunity to help restore our housing markets by keeping declining property values stable. It will protect neighborhoods from a glut of vacant homes. I will continue to work with my colleagues to get this bill passed, and, if need be, to overcome a Presidential veto. This legislation cannot come too soon.

Mr. President, I thank my colleague for talking about the energy situation and the price of gasoline. I have traveled my State hard. I know Senator Enzi knows his State like the back of his hand. He goes to every place in it repeatedly and talks to average people. They are hurting.

Look at the numbers. In 1 year, over the last year, the average family drives 24,000 miles a year. The average family

is paying $105 a month more for gasoline for their automobiles than the previous year. You go back over, since 2003, it is $217. That is a new expense they never had before, and 60 percent of that money is sent abroad to purchase oil that we utilize because 60 percent of our fuel comes from abroad. It totals $500 to $700 billion in a wealth transfer each year now. It is unbelievable. T. Boone Pickens said it is the greatest wealth transfer in the history of the world and it is adversely affecting our economy, not just the fact that the family has less money now to take care of other needs. It has to go to gasoline so people can commute to work, in large part, I would submit, by the failure of this Congress to act.

I have been speaking on these issues ever since I came here. I have been pointing out the need for increased production consistently. We produce off my coast in Alabama substantial amounts, but 85 percent of our offshore production is now blocked.

We need to do this. We are talking about $105 more a month out of the family budget, so they can't purchase items with this money. It is rippling through the economy. It is not a ripple; it really is a tsunami.

Let me point out some of the things in recent magazines and recent newspaper articles. Here from the New York Times yesterday:

High fuel costs lead AirTran to cut 480 jobs. AirTran

announced it would eliminate 480 pilot and flight attendants'

jobs, joining a growing list of airlines that have cut their

workforces in the face of high fuel prices.

The cost of jet fuel has risen 92 percent this year, which is almost double in 1 year.

Here is the New York Times of July 8:

Markets decline even as oil pulls back a little bit.

The price dropped just a little.

Wall Street, which has been hurtling stocks lower for the

past few weeks, remains fearful that consumers are trimming

their spending to pay for gasoline. With consumer spending

accounting for more than two-thirds of [U.S.] economic

activity, a pullback would create big ripples.

Boy, I tell you, they are reducing spending; $105 less a month they have now to spend on other items because they are having to spend on it gasoline.

Here is the Wall Street Journal the day before yesterday:

Stock Drop Spooks Currency Investors: Oil Prices Still Key.

. . . Janet Yellen [Federal Reserve Bank member], who made

surprisingly worrisome comments about inflation.

``The continuing rise in oil and commodities has certainly

raised the inflation risk.''

It is just every day. Does anybody not understand this? I have to tell you, I have to say, and I have spoken about this several times, I am utterly disappointed in my Democratic colleagues for having no plan whatsoever to deal with this problem. It is just not a plan. I am willing to discuss how we can work together. I am not wedded to every single issue, I would say. I am willing to consider anything that will work. But I will tell you that the Democratic leader made a speech down here, and they offered a policy that proposes these things:

Tax the oil companies; that would make us feel better. It might even be a good policy to raise revenue, perhaps. But it is not going to increase oil production to tax the people who do it. When you tax something, you get less of it. People cannot pass a law to repeal the law of supply and demand. You tax it, you will get less of it.

No. 2, they want to prosecute, pass a law to empower the FTC to prosecute stations for price gouging. We already have a law that allows the FTC to do that. They say the gas stations are not prosecuting. They want to go prosecuting after speculators. Speculators are able to operate and be successful. I don't defend them. They are out to make a buck any way they can. They are able to do that because we have a demand for oil that is greater than supply. I think it is 86 million barrels of oil demand a day at this point and 85 supply. So they are able to maneuver in that thing and play this game and make themselves some extra money. But if we got the supply up and our demand down, they wouldn't be able to do this. They couldn't do it when we had $10-a- barrel oil a decade or so ago.

They want to sue OPEC. OPEC, what do they do? OPEC meets to decide the amount of oil they want to produce essentially, and that creates the shortages that are driving up the price. Eighty percent-plus of the oil in the world today is not held by oil companies. It is held by nation states, many of them hostile to the United States. OPEC meets to set the price by controlling the supply. They are reducing and not producing the oil that they could if this was a real free market. They are manipulating the market. OPEC meets to decide how much they are going to tax the consumers of the world and, in particular, how much they are going to tax us.

I have to tell you, it is a dramatic thing that is happening. I am told that it costs less than $10 a barrel to produce oil from the sands of Saudi Arabia. Yet they are selling it for $140 a barrel. This is the kind of wealth transfer that is damaging our economy. It is hurting this Nation. It is something we have to confront with real policies that will work, and there are some.

I happened to catch Jack Welch, former CEO of GE, on one of the morning talk shows not long ago. They were dealing with this question of Senator Obama and many of our colleagues here who say: Don't drill in Alaska; it might take 10 years. It wouldn't take quite that long, but they say 10 years. You shouldn't drill off the coast; that will take 10 years. Really, drilling off the coast, you begin to get production. They drill off my coast in Alabama right now, but there are other areas with lots of reserves. It would take 3 years, 5 years to get production.

This is what Mr. Welch said. He said: It is amazing to me that a person who aspires to be the President of the United States would say he is not going to take a policy today that won't have an impact for 5 years. Think about it. He went on to say: A President should be thinking 5, 15, 30 years down the road. We need to be doing the things that serve our long-term national interest. Just because it would take some time to have this go forward, we should not delay taking action.

The matter is pretty serious. A Wall Street Journal article by Gerald Seib, executive editor, notes that there are three problems with the high prices of oil. One is that, of course, it impacts the family budget. The second is that the high prices weaken our Nation's economic independence because we owe so much money for it. Thirdly, the money is enriching countries, many of which are hostile to the United States.

So I think we are at a point in time when we need to get together, Republicans and Democrats, and recognize that we face a problem that challenges our family budgets, that we have, in effect, taxed the American people, or allowed them to be taxed, by over $100 more a month in 1 year alone, that we can make a difference and bring those prices down--certainly stop the continuing increase. But we have to do something. There are things we can do.

I will say, as a person who has been able, a few times, to go fishing on the gulf coast, we go out and fish under oil rigs because that is a good place to fish, and it is clean and there is no oil out on the water. They are very careful about that.

We have approximately 51 billion barrels or more of recoverable reserves in the Gulf of Mexico. That is a lot. We use, as a nation, 5 billion barrels a year, and 3 billion of that is imported. If you replaced that 3 billion, that would be 17 years right there just from offshore production in the Gulf of Mexico. We have 85 percent of our reserves still blocked. We have had production that is still being effective off the coast of California before that was blocked. None has been expanded since, in decades, and none, really, off the Atlantic coast. But there are reserves out there. States such as Virginia are talking about maybe that would be a good way to produce additional oil and serve the national interest.

We have the opportunity to produce oil from shale. There are 1.8 trillion barrels of oil in shale rock. Perhaps 800 billion of that is recoverable, experts tell us. We are using 5 billion a year, so that is 100 years or more from shale rock. I am told they can produce that at less than the current world price, keeping wealth at home, producing our energy at home, not sending that abroad.

I will tell you, one of the greatest potential breakthroughs that could help us with global warming emissions and

other areas is hybrid automobiles, particularly a plug-in hybrid. I strongly believe we should--my time is up.

Mr. President, I ask unanimous consent to have 1 additional moment.

Mr. President, I will conclude by saying that nuclear power produces no emissions into the air. We need to expand it. We are at 20 percent now in our Nation. We have not built a plant in 30 years. France has 80 percent. We could plug in our cars at night, charge those batteries with clean nuclear electricity, and run back and forth to work. That is within our grasp right now.

Those are the kinds of things we need to be talking about: expanding wind, expanding biofuels, expanding the production of our existing resources, keeping American wealth at home, ending this incredible transfer of wealth.

I thank the Chair and yield the floor.