Don’t Let Consumers Speak

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What if you held a hearing, but the people who were most directly affected by the proposals were barred from speaking? That’s what happened yesterday.

The Financial Services Subcommittee on Financial Institutions of the House Committee on Financial Services held hearings on credit cards. Congresswoman Maloney (D-NY) has sponsored a bill with 82 coauthors that would outlaw some of the worst credit card tricks and traps. The card issuers were there in full force — complete with an army of lobbyists to pack the audience. The professors — Katie Porter, Adam Levitin, Larry Ausubel and I — were there to try to give the other side.

Our panel was supposed to be the second panel. The first panel was four regular people who wanted to give first-hand information about their experiences with their credit cards. 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.

The people who had been invited to testify had flown in from around the country with their credit card bills in hand, only to learn that they couldn’t talk unless they would sign a waiver that would permit the credit card companies to make public anything they wanted to tell about their financial records, their credit histories, their purchases, and so on. The Republicans and Democrats had worked out a deal “to be fair to the credit card lenders.” These people couldn’t say anything unless they were willing to let the credit card companies strip them naked in public.

So that’s where it stood when Congressman Bachus (R-AL) roared into the hearing about three and a half hours after the hearing started. It seems that someone in the press had made some critical statement about the deal, and he was furious. He kept talking about how it wasn’t fair that someone could say something and there wouldn’t be any way for the credit card companies to say whether it was true or not. Fair is fair, he kept insisting.

I had never heard of a deal that kept ordinary citizens from testifying, so I asked a question. I just wanted to understand the terms of the new arrangement. During the preceding 3 1/2 hours the credit card issuers had repeatedly made various factual statements about their practices, their customers, their revenues and so on (e.g., “College students have the same default rates as our other customers,” “98% of payments are made for free,” or companies raise interest rates “to control risk, not to increase profits.”) So I asked if the credit card companies were going to testify to such factual statements, would they be required to produce the data to back up the claims so that we could all see it and evaluate it. Katie, Adam, Larry and I all used public data and footnoted our work. Surely it wouldn’t be fair for the credit card companies to make factual assertions that no one could challenge because no one else had any access to their underlying data. If the new rule is that everyone has to release everything so others can challenge it, when the card issuers want to testify as to “facts,” shouldn’t hey have to back up their claims by showing us the numbers?

I never quite understood the Congressman’s reply. I’m still waiting to find out what fair-is-fair really means.

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