This past week, talks in Washington centered on regulating the financial industry. The Obama administration has proposed to give the Fed systematic powers in overseeing the banking sector as a whole. A lot of lawmakers are criticizing this plan, arguing that giving too much power to the Fed might be risky. There is currently limited disclosure about the Fed’s multibillion-dollar lending programs. If they weren’t transparent in the past, why would they change in the future? Another concern is the structure of the Federal Reserve itself. Regional branches are not classified as government agencies.

Meanwhile, other lawmakers cite that the Fed has a conflict of interest. If it tasked to conduct monetary policy then it might not be the best body to supervise banks. Senior Fed officials have argued, however, that the two tasks are actually complementary. Since the agency is involved in crisis stabilization, they need to have other roles in the financial system.

Whatever the case may be, ultimately, it is the public who has to pay for the decisions made on Capitol Hill. Bloggers from all over the country have expressed their opinions about these developments. Here is a list of blogs that talk about the Fed’s proposed systematic role, the criticisms of the system, and how it will affect ordinary Americans:

Paul Joseph @ Prison Planet wrote an insightful blog post entitled “Ron Paul Slams Federal Reserve’s New Dictatorial Powers“. Here, he provides a lot of quotes from Ron Paul and explains his argument. The criticism of Obama’s proposal is centered on giving the Fed additional authority. It might be too risky for the industry as a whole.

The Look at Vietnam blog provides updated information about the news in Capitol Hill. One article uploaded this week is titled “Geithner Says Federal Reserve Best Positioned for Super Regulatory Role“. It explained the position of the Treasury Secretary. He also said that the plan will only give the Fed a modest amount of additional powers.

Sudeep @ the Wall Street Blog wrote an in-depth blog post, “Financial Regulation: Congress Takes on the Federal Reserve“. It basically outlines the arguments lawmakers have over Obama’s proposed reform and the administrations answer to these concerns.

The Senate has passed a new credit card legislation designed to stop abuses in the industry. Consumers will particularly benefit from this measure because of unfair rate increases, provisions in small print, and fee traps will no longer be permitted. In addition, there will be greater accountability required in the credit card industry.

If you have been burned by a credit card company in the past, you can relax. With the new measure, you can start using your credit card again without fear that you will be mercilessly charged penalties, finance charges, and other types of fees without your previous knowledge or consent.   This week’s round-up of blogs focus on posts that talked about the new credit card measure and how it will affect your finances.

Jim Manzi @ National Review Online wrote an interesting article titled “Credit Cards Don’t Kill Credit Ratings, People Do“. Essentially, he cited the reasons why bad credit should be attributed to individuals, not financing institutions. It is still an individual’s own responsibility to oversee their personal finances by determining how much they can afford to spend. Credit card companies are simply the medium that lets them borrow money.

Jennifer Freeman @ Think Glink wrote a short blog post “Credit Cards: Changes in New Credit Card Legislation“. Here, she discussed about what the average consumers can expect from the new bill that has been passed. The blog post was particularly inclined towards outlining the benefits of the new legislation. At the end, she posed a question about what readers think will happen with this law being implemented.

Ismat Mangla @ CNN Money outlines the effects of the newly revised legislation on credit cards for the ordinary consumer. The post entitled “What Credit Card Legislation Means to You” was especially helpful in identifying the areas in which the law will make the most impact on your life.

Bart Narter @ Celent Banking Blog stated his musings about the new credit card legislation in his post “Credit Card Legislation“. His blog post gives an unbiased view about how this law will affect the banking industry and consumers alike. While consumers will benefit from exorbitant penalty fee, credit card companies will suffer because they cannot appropriately penalize irresponsible cardholders. The blogger calls for a compromise.

Credit cards have a variety of uses and can provide different benefits including rewards points, cash back, free airline travel, and even a better credit rating for responsible consumers. However, if it is used incorrectly, it can mean that the customer can end up knee-deep in debt. Before anything else, it is critical to determine if you can actually pay for an item before you charge it to credit. Otherwise, your debts will pile up not only because you keep borrowing but also because of compounded interest.

This is easier said than done though. According to the Federal Reserve, 40 percent of US household have credit card debts. A significant percentage from this figure is struggling with repayment. To help you avoid this problem, we have compiled a list of tips you can follow:

• Pay Your Credit Card Bill By the Due Date – late fees can be significant. It can readily amount to $30 or higher depending on the credit card company. Take note that missed or late payment can also adversely affect your credit card score and increase the interest you need to pay on future loans.
• Limit the Number of Your Credit Cards – most people have more than one credit card. An average person holds two to three cards while some have as much as six credit cards. This serves no purpose other than make the temptation to buy almost irresistible to you.  Try to close one account at a time if you have more credit cards than you should. Don’t close two at the same time because it might lower your credit score.
• Learn to Negotiate – it is possible to negotiate for a better rate especially if you have a good credit score. Compare several offers and then call your credit card company to ask them if they can match these offers.
• Read the Fine Print – find out how much you need to pay as interest, the grace period, and any hidden fees that may be charged by the credit card company. Congress has recently passed a bill that prevents abusive credit card practices but it will not be in place until July 2010. In the meantime, it is important for you to remain cautious in using your credit card.

It is undeniable that credit cards are essential financial tools today. However, like most financial products, you should know your spending limit whether or not you’re using credit. Many companies offer various types of features including low interest and rewards points. Be sure you know what you’re getting into before you charge anything to your card.

In response to the financial crisis, Americans need to be well-aware that changing our frivolous spending habits is crucial; however, this week, Congress is holding credit card companies responsible for their practices as well.   Consumers are subject to credit card companies’ terms and conditions upon signing their detailed agreements; however, what happens to consumer rights when these credit card companies change terms at their own discretion?  The results have proved disastrous for everyday Americans’ bank accounts, as abusive credit card practices find new ways to create endless amounts of monthly fees.

Credit Card Companies’ Abusive Practices

To understand both the importance and potential impact of laws that protect consumers against credit card companies, it is crucial to be aware that credit card rates change unexpectedly.  Fees often appear on your monthly statement out of nowhere, even when you pay your bills on time and have made serious efforts to be in good credit standing.  These companies raise interest rates and dramatically cut credit limits, with little or no regard for how these changes affect loyal customers.  Struggling consumers are left with a large bill and little support-until now.

Senate Banking Committee Approves Bill to Regulate Credit Card Companies

Good news: the Senate Banking Committee, led by Chairman Senator Chris Dodd of Connecticut,  approved legislation that will begin the fight against unfair credit card company practices.  Below is what was outlined in the bill:

• “Protect consumers from “any time, any reason” interest rate increases and account changes.”

• “Prohibit unfair application of card.”

• “Protect cardholders who pay on time.”

• “Limit abusive fees and penalties.”

• “Prohibit issuers from using a consumer’s card history with another creditor to raise interest rates.”

• “Prohibit issuers from charging interest on debt that has already been repaid.”

• “Ensure that cardholders are informed of the terms of their account.”

• “Protect young consumers from aggressive credit card solicitations.”

What will the Credit Card Accountability, Responsibility, and Disclosure Act do for Everyday Americans?

This bill will give a voice to consumers that goes beyond the 24/7 customer support that most credit card companies offer.  The consumer’s voice will now have legal backing, as the government is taking the first step to acknowledge the role credit companies have played in the US financial crisis.  According to The Consumer Federation of America’s Legislative Director Travis Plunkett, “Congress is taking a strong stand against the traps and tricks that many credit card companies use to increase their profits at the expense of financially vulnerable consumers.” With a July 1, 2010 deadline to implement the bill’s outlined changes, Americans can begin to feel good about the progress we are making towards fixing the credit crisis.  The crisis certainly cannot be fixed overnight, but bills like this make accountability a priority for both businesses and consumers.  With legal backing, credit card companies will be forced to take an active role in getting our economy back on track.