Senators Eye Legislation to Prevent Credit AbusesFurther legislation might be needed to prevent improper lending practices in the credit industry, two senators said during a Senate banking committee hearing this month focusing on improving the public's understanding of personal finance.
Sen. Christopher Dodd, D-CT, said he is considering a bill that would prohibit credit card issuers from giving cards to people younger than 21, unless they have a co-signer or have demonstrated the means to pay off an account balance. If not, they would have to complete a certified credit counseling course before being issued a credit card.
Sen. Paul Sarbanes, D-MD, chairman of the Senate Committee on Banking, Housing and Urban Affairs, said legislation might be needed to combat abusive mortgage and credit card practices.
Meanwhile, a senior Treasury Department official who requested anonymity said he is urging credit card issuers to "devote significant resources" to a public service campaign to promote financial literacy. The public service announcement would be similar to those run by the tobacco and alcohol industries about the dangers of their products.
Treasury secretary Paul O'Neill said in testimony before the banking committee that the sheer number of financial services products available have made it more difficult for Americans to make informed decisions about their finances.
"Today's expansive menu of financial product offerings ... has added complexity to the decisions Americans must make in choosing the financial products that best serve their needs," he said. "We have significant room for improvement in the area of financial education."