Jeb Hensarling

Mr. HENSARLING

Mr. HENSARLING. Well, one thing of interest, I suppose, is that if we adopt the earlier amendment of the gentleman from New York, this all becomes irrelevant anyway since the effective date would be immediate. So I believe that----

Mr. HENSARLING. Mr. Chairman, may I inquire how much time is remaining?

Mr. HENSARLING. At this point, I will reserve the balance of my time.

Mr. HENSARLING. Well, reclaiming my time, then I would question the body on what particular purpose the amendment then serves.

Mr. HENSARLING. Well, reclaiming my time, I was still reading as I yielded to the chairman. So I can either read or I can yield to the chairman. I would be happy to yield to the chairman.

Mr. HENSARLING. Yes, I would be happy to yield to the gentleman.

Mr. HENSARLING. Well, I thank the chairman. Reclaiming my time, During the period beginning on the date of the enactment of this act and ending 9 months after the date, no creditor may increase annual percentage rate fee finance charge. Again, under the subsection it appears again ``for at least a 9-month period.''

Mr. HENSARLING. I would be happy to yield to the chairman.

Mr. HENSARLING. While I am somewhat unclear why this amendment was made in order, it seems to do precisely the opposite of what the Expedited CARD Reform for Consumers Act was supposedly designed to do. This freezes prices. And yet we have had so many Members on the other side of the aisle tell us the bill doesn't do that. I see that the chairman of the full committee has come back to the floor. Just in September, on September 23, the chairman was quoted as saying on the House floor, When it comes to rate setting, this bill, to the disappointment of some, doesn't limit future rates. As far as the future is concerned, if proper notice is given, this bill is not restricted. Well, the adoption of this amendment would seem to fly in the face of that. The chairman, I assume, was correct when he said it. But if the House adopts this amendment, it will no longer be true. The chairman of the subcommittee, the gentleman from Illinois (Mr. Gutierrez), There is no limit in this bill on the interest rate that you can charge. None whatsoever. That was spoken on the House floor on April 29. Again, if the amendment is adopted, that will no longer be true. This bill aims to bring back some balance in the playing field. Unlike other proposals out there, this bill does not set price controls or rate caps or limit the size of fees. That would be the gentlelady from New York who spoke those words in subcommittee in March of 2008. Again, if the underlying amendment is adopted, it seems to change the nature of the underlying bill.

Mr. HENSARLING. Mr. Chairman, I claim the time in opposition.

Mr. HENSARLING. Mr. Chairman, I would agree with the chairman of the full committee, people who do it right shouldn't be penalized, and that is exactly what is happening in the underlying legislation. This particular amendment is simply tantamount to a gag order to tell credit bureaus that they can't report accurate information that creditors want in order to give credit. It is going to take credit away, make it more expensive and less available as we try to finance the trillion dollar government takeover of health care.

Mr. HENSARLING. Reclaiming my time, I thank the gentlelady for her explanation. I fear for, frankly, a number of creditors it might just have that impact. So again, I would oppose the underlying amendment because I think, again, under the purpose of attempting to help the consumer, you might actually hurt the consumer. And I think what we want is to make sure that creditors receive the most accurate information possible because it has helped allow more Americans to receive credit than otherwise would be possible. Now I don't know, there may be some credit bureau out there who believe that people like me who wear red ties are a greater credit risk, I don't know, I am not an expert in it, and I feel quite certain that my colleagues are not experts on what constitutes a greater or lesser credit risk, and except for the prohibited classes of race, creed, and color which have been clearly delineated in our civil rights laws, why do we want to start dictating to credit bureaus about what constitutes a greater risk and what constitutes a lesser risk. Again, it might make us feel better. It may have good optics; but at the end of the day, I fear the result is if you start restricting, if you go down the road of beginning to restrict the information that is available to creditors, with less information, they are either going to make credit less available or they are going to increase the cost of it because it becomes a greater risk. Listen, on its face the gentlelady's amendment strikes me as fair; but I don't believe Congress has expertise in this. Again, when we are facing the imposition of a trillion dollar government takeover of our health care bill, I believe this will make credit less available and more costly. I reserve the balance of my time.

Mr. HENSARLING. I thank the gentlelady for her explanation. The next question I had, on line 14 there is the phrase ``to negatively impact.'' I am curious whether or not certain creditors feel they are getting accurate data, whether or not this could cause them to drop the consumer's credit card in total, but I suppose the language you use is to negatively impact the consumer's credit score or credit report. So if the impact of your amendment, because incomplete or inaccurate data was given by a credit bureau to a creditor and they chose instead not to take the risk, that the negative impact of losing their credit card, that is not assumed in your amendment? I yield to the gentlelady.

Mr. HENSARLING. That it would, okay. So an altogether new fee that had not previously been imposed, that would be included in the language and any increase in an existing fee would come within your definition of new fee, correct? I yield to the gentlelady.

Mr. HENSARLING. Mr. Chairman, there are aspects of the legislation I am not sure that I completely understand, and if the gentlelady from Ohio would be willing to explain her amendment, I will be happy to yield her time. On line 9 of the amendment, it speaks of the notice of the imposition of a new fee, and I am curious whether a new fee, does that include increasing the amount of a fee that is already in existence? I yield to the gentlelady for a clarification.

Mr. HENSARLING. Mr. Chairman, I claim the time in opposition.

Mr. HENSARLING. Thank you, Mr. Chairman. Again, I fear that this amendment is simply going to take a bad situation and make it worse. How will all of our constituents be able, again, to pay for this monstrosity of a government takeover of our health care system, one that will directly tax a number of our constituents? Page 297, section 501, imposes a 2.5 percent tax on all individuals who do not purchase the government-approved health insurance; 2.5 percent. Now, again, a number of our constituents use credit cards to help pay for their medical expenses, to pay for their groceries, to pay for everything else. And now a number of them are going to be subject to a 2.5 percent tax. How will this amendment help them? New taxes on medical devices, a 2.5 percent excise tax, which many call the wheelchair tax, particularly I assume a number of seniors will be subject to this tax. I know a number of them rely upon credit cards. Will their credit cards ultimately be taken away from them under this legislation? The underlying legislation takes away the ability, erodes the ability to do risk-based pricing and takes us back to an era where a third fewer people had access to credit cards and everybody paid annual fees and everybody paid one universal high interest rate. The underlying legislation takes us down that road, and the gentleman from New York's amendment gets us there tomorrow. And then later in this week we're going to tell our constituents, Congratulations, we just passed a $1.3 trillion government takeover of your health care system that you have to pay for through new taxes on individuals, new taxes on medical devices, new taxes on small businesses, at a time where this Congress and this administration has brought us the first trillion-dollar deficit in our Nation's history, tripling the national debt--tripling the national debt--in the next 10 years. The least you can do is at least allow your constituents to have a credit card to help pay for this mammoth takeover of our government health care system. I yield back the balance of my time.

Mr. HENSARLING. Mr. Chairman, may I inquire how much time is remaining on each side?

Mr. HENSARLING. Mr. Chairman, as I have said before, there is never a good time to enact a bad bill. Here we are again in the midst of a huge credit contraction. Every single day people are waking up, they're losing credit cards. Their interest rates are increasing. We have had at least 3.5 million of our fellow citizens lose their jobs since this administration has taken office. We have the highest unemployment rate in a quarter of a century. And yet in the midst of this credit contraction, when people are having trouble expanding their business, creating jobs, paying their bills, we are going to enact legislation that simply is procyclical and makes the whole matter worse. I heard the gentleman say we can't enact this retroactively. I would say, at least in the years I have been in the House, we have certainly tried. I suppose that might be the next amendment. Maybe we can make this retroactive to 1974 or some other fairly arbitrary date. Again, this particular legislation has to be put in the context of the trillion-dollar legislation, the government takeover of our health care system, that this House is due to vote on, apparently, according to the Speaker, either Friday or Saturday. And I question each and every amendment. Will our constituents be less able or more able to afford to pay for this $1.3 trillion government takeover of our health care system if we pass this amendment? My guess is that the gentleman from New York's amendment fails that test. And so I would urge that we reject that amendment. I reserve the balance of my time.

Mr. HENSARLING. Mr. Chairman, I claim the time in opposition.

Mr. HENSARLING. I will yield myself as much time as I may consume. It appears that if a credit card issuer does not increase an annual percentage rate fee or finance charge applicable to any existing or future balance, it need not comply. With the bill's requirements, payments above the minimum will be allocated first to that balance until February of 2010. So I guess there is a carve-out for credit card issuers who do not increase annual percentage rates. I suppose at the margins it is good to give more choices instead of fewer choices. Whether or not this results, again, in some people having to pay even more in fees, maybe an annual fee, I don't know the answer to that question. I suppose I will urge my colleagues to adopt this. But again, all of this legislation, Mr. Chairman, has to be put in the context of the legislation that this body will consider this Friday or Saturday and that is the 1,990-page government takeover of our health care system bill. And I think that on every single piece of legislation that we consider in this body prior to that time, we have to ask the question, If our constituents are going to be looking at having to pay for a trillion-dollar government takeover of health care legislation, is any particular amendment going to make our constituents have a greater ability or a lesser ability to pay for that? I am thinking specifically right now of all the seniors across America, particularly those in the Fifth Congressional District of Texas that I have the honor and privilege of representing, who will see their Medicare Advantage plans cut by $150 billion under the government-takeover-of-health-care plan. Now, if so, on the health care benefits they're receiving under their Medicare Advantage plan that my colleagues on the other side of the aisle will cut $150 billion from Medicare Advantage, will the seniors in the Fifth Congressional District, will they still have access to credit cards, for example, that help them fill the gap to, number one, help pay for the trillion- dollar health care bill and, on the other hand, as $150 billion is taken away from those who receive Medicare Advantage, particularly those in rural areas? In representing the Fifth Congressional District of Texas, I represent a lot of rural America. So it's a little unclear to me whether the underlying amendment is going to make it easier for seniors to keep those credit cards or not. I believe perhaps at the margin it does; and because of that, I will urge my colleagues to adopt this. Again, all of this has to be put in context of the trillion-dollar government takeover of our health care system. And I hope the gentlelady's amendment helps ease the pain of that legislation. I yield back the balance of my time.

Mr. HENSARLING. Mr. Chairman, I rise to claim the time in opposition, although as I seek to understand the amendment, I am not completely certain that I am in opposition.

Mr. HENSARLING. Mr. Chairman, certainly we had a spirited debate on the underlying legislation. I do want to thank the chairman for his efforts for allowing this particular amendment to be made in order. I have always feared that on a number of pieces of legislation that Congress enacts that it is always fraught with unintended consequences. I believe I stumbled across one of those unintended consequences. I believe it was last week, perhaps the week before, that I was contacted by one of my constituents who had received a credit card offer in the mail that offered him a better interest rate than the interest rate his current credit card offered; but because of a number of other provisions, he wanted to keep his current credit card. So he called his credit card company and said, Would you match this other deal on the interest rate? I want to stay with you, but will you match this interest rate? He was told by whatever voice was on the other end of the 1-800 number, We would like to match your interest rate, and we will match your interest rate, but we cannot do it for 45 days under a law recently enacted by Congress. Now, I certainly don't believe that was the intent of the majority, but clearly the language in the underlying bill is being interpreted by some credit card companies to prevent them from lowering rates or lowering fees without a 45-day notice. Again, I do not believe that was the intention of the majority, and they may have written their bill thinking they had taken care of that. But, clearly, the language is sufficiently ambiguous for some companies that they do not feel that they can actually lower interest rates or lower fees or cancel fees or do something that almost every single individual in this body would interpret as only, only benefiting the consumer. So, Mr. Chairman, my simple amendment would provide a clarification that no provision in the subsection shall be construed as preventing any creditor from putting any reduction in an annual percentage rate, any decrease or elimination of any fee imposed on any consumer or any significant change in terms solely or primarily for the benefit of the consumer into effect immediately. So, again, what I believe the majority was trying to do would be preserved, and I think what they were trying not to do and, that is, certainly I do not believe it is their intent to have consumers wait for 45 days for lower interest rates. Again, I grant you, in this economic environment, it is not a common occurrence, but apparently it does occur or this constituent wouldn't have called me in the first place. So I believe it is a simple amendment. Again, I hope it takes care of an unintended consequence. I fear there are many other unintended consequences, but this is one that it would take care of, and I would certainly urge all Members of the body to adopt the amendment. Again, I thank the chairman for making sure that this particular amendment was made in order. I yield back the balance of my time.

Mr. HENSARLING. Mr. Chairman, I have an amendment at the desk.

Mr. HENSARLING. Reclaiming my time, I appreciate the chairman keeping me informed. Again, Mr. Chairman, what we have seen is what I believe to be a number of unintended consequences that have taken place in this legislation. We were warned about this. We heard from, for example, the ABA, who testified at the committee back in March, Restrictions on repricing higher risk accounts means two things. Number one, that higher risk customers will likely see less credit available to them; and, two, since the higher risk customers do not bear the full cost of the risk they pose, lower risk customers will bear some of the added cost. We heard back in December of 2008 from Oliver Ireland of the Morrison and Forester law firm: The effects of this are going to be pretty severe. People are going to see either some combination of rising prices or a reduction in the availability of credit by either cutting lines or simply not making credit available. Again, Mr. Chairman, we have been warned. Julie Williams, chief counsel for the OCC, who testified before our committee back in April of 2008: The risk mitigation tools used by credit card lenders to address changes in the credit risk profile of customers may include freezing or reducing credit lines, closing accounts, shortening account expiration dates and repricing for outstanding balances on the account. I could go on and on. We have been warned, Mr. Chairman. We see it happening. We hear the anecdotal evidence. We see the statistical evidence. Again, I fear that although there are some good aspects of the legislation, that ultimately, ultimately, in the midst of a huge credit contraction, that what we will see is credit become even less available and more expensive, at a time when many of our constituents need it most. Again, this has to be put into the context of the larger legislation that this body will consider this week, according to the Speaker of the House, and that is the government takeover of our health care system. We know that on page 297, section 501 of that bill, there is a 2.5 percent tax imposed on all individuals who do not purchase the government-approved health insurance, which clearly applies to people making less than a quarter million dollars a year, which seems to contravene a campaign commitment that was made by our President. We also see that there are new taxes on medical devices, a 2.5 percent excise tax. Again, many call this the wheelchair tax. But as our constituents are finding it more and more difficult to access credit cards, when they are having their credit cards cancelled, when they are seeing their interest rates rise, how are they going to be able to pay the 2.5 percent medical device tax in this $1 trillion piece of legislation? Mr. Chairman, I hear from my constituents. I hear from the Farmer family of Athens who wrote to me once, Dear Congressman, more than once we have put medical bills on our credit cards. Two years ago, my middle son had to have cervical surgery. I split the cost of the surgery, doctors and hospital. It took my husband and me about a year to pay off that particular debt, but we did it at a low rate of interest since our credit is good. I am just thankful for having the means to help my son. Now, what do I go back and tell the Farmer family of Athens? Well, Congress decided to pass a piece of legislation; that although your credit is good, you are going to have to start paying more for people whose credit isn't good. The next time you have a medical emergency or challenge in your family, I don't know if that credit card will be there for you. That is a tragedy, Mr. Chairman, as, again, we continue to have this huge credit contraction. And, again, when we are looking at this $1 trillion government takeover of our health care legislation that on page 336, section 551, imposes a half a trillion dollar surcharge, supposedly just on the wealthy, but if you read the fine print what you figure out is that half of that is going to be paid by small businesses. So you could have a $534 billion surtax imposed in this government takeover of health care legislation, and as you impose this, again, how is small business going to be able to afford to pay this surcharge if on their credit cards their interest rates continue to rise and their availability to access credit continues to erode? I don't understand it. Then the more visible tax on small business, page 313, section 512 of the government takeover of health care bill imposes an 8 percent tax on employers who can't afford to purchase the government-approved health insurance. Now, according to the National Federation of Independent Business, such a mandate could cost 1.6 million jobs in the next 5 years. So, if you lose your job and we are making credit more expensive and less available, Mr. Chairman, I just ask the question, how is this supposed to improve the Nation's health care? So we have to take a look at the underlying credit card legislation and how it is going to impact our constituents as we go forward, perhaps on Friday or Saturday, to vote on this other legislation. We also know, Mr. Chairman, that in the government takeover of our health care bill, that there are at least 43 new entitlement programs that are either created, expanded or extended in the bill. Now, is somebody going to tell me that doesn't make health care more expensive? And if it makes health care more expensive, how are Americans who are losing their credit cards supposed to pay for the $1 trillion takeover of our health care system? In addition, there are 111 new offices, bureaus, commissions, programs and bureaucracies that the bill will put between Americans and their doctors. Are you going to tell me, besides rationing health care, that somehow that is going to make health care less expensive? I don't believe so. If it doesn't make health care less expensive, and I haven't found anybody to come to this floor to tell me that this 1,990-page bill costing the American people over $1 trillion is somehow going to make their health care less expensive, so if it doesn't make their health care less expensive, why would we want to support legislation that, again, has the impact and effect of taking away millions of Americans' credit cards or artificially raising their interest rates? I don't get it. Mr. Chairman, in this $1 trillion government takeover of our health care system bill, we have 3,425 uses of the word ``shall'' representing new duties, new obligations, new mandates on individuals, businesses and States, which, oh, by the way, is double the number that we saw in the last iteration of the government takeover of our health care system bill. Okay. So if we have 3,425 different mandates in this bill, is that somehow going to make our health care less expensive? I don't believe that. I don't believe the American people believe that. And, again, Mr. Chairman, if it doesn't make our health care less expensive at a time when our Nation has just achieved its first $1 trillion deficit in our history, when this Congress has enacted a spending plan that will triple, triple the national debt in the next 10 years, that is even before the $1 trillion government takeover of our health care bill comes to the floor, how can we pass a piece of legislation making credit less available and more expensive? I urge rejection of the bill. I yield back the balance of my time.