Edwards Advances Credit Issues

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John Edwards has made us think hard about two Americas. In a Businessweek interview released today, he makes credit cards a central issue as he reaches out to working families. Here’s the exchange:

Q: As President, what would you do to help middle-class Americans reduce credit-card debt and help lower-income people avoid getting trapped by predatory credit-card lenders?

Edwards: What we’re going to do is restore balance in the credit-card market. I am proposing a Borrower’s Security Act that would do the following: first, require credit-card companies to disclose the true cost of making only minimum payments, as many consumers do. Second, I would restore a 10-day grace period before imposing late fees and penalty rates. Third, apply interest-rate increases to future balances only. And fourth, end the practice of universal default, where a creditor can change a borrower’s terms based on their debt payments to other creditors. We also need a new consumer protection commission, which I would call the Family Savings & Credit Commission, whose job it’ll be to review all the financial services products that are being marketed to families and ensure that the terms are reasonable and fairly disclosed. [The commission would] oversee all types of financial institutions whether chartered under federal or state law.

We talk a lot on Warren Reports about credit card tricks and traps. Financial products quickly morph into unrecognizable forms — universal default, double-cycle billing and a host of other bad practices didn’t exist twenty years ago. Targeted legislation is slow, and intense lobbying from the industry turn most proposals into non-starters. I argued in a new piece in Democracy that the only chance to regulate these products and provide real consumer safety is to empower a new commission to develop expertise, monitor the industry and move quickly. Let’s have one big push and get something in place that will work on behalf of consumers year after year. Edwards isn’t looking for a few quick changes that will leave the industry largely undisturbed. He is pushing for systemic change.

There are a lot of issues in play during the primary season, but I am very glad to see John Edwards carry this one forward.

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