The U.S. consumer financial watchdog plans to fix part of a 2009 law that has unintentionally prevented stay-at-home parents and other individuals from obtaining credit cards.
The director of the Consumer Financial Protection Bureau, Richard Cordray, said on Thursday that his agency intends to draft a proposal this year to address a provision of the Credit CARD Act that requires companies to consider an applicant's ability to pay before issuing a credit card.
The Federal Reserve, which was first charged with implementing the law, interpreted the provision to mean companies could not consider total household income and would have to deny cards to applicants who did not have their own source of outside income.
Lawmakers have since said they did not intend that when they passed the law, but a proposed legislative fix faces a tough road through a generally gridlocked Congress.
"This is clearly an unintended consequence of the legislation," Cordray told members of the House of Representatives Financial Services Committee at a hearing.
Cordray appeared before the committee to present the consumer agency's semiannual report. The report was required by the 2010 Dodd-Frank financial oversight law, which also established the consumer watchdog.
Lawmakers, particularly Republicans, grilled Cordray on a number of controversial rules related to mortgages, overseas money transfers and other issues Dodd-Frank tasked the agency with regulating. But members from both parties urged the CFPB to quickly address the Credit CARD Act issue.
"We feel that we created the CFPB to handle these types of problems, we've made it a top priority of the subcommittee and the committee, and it's a priority on both sides of the aisle," said Representative Carolyn Maloney, a Democrat who sponsored the 2009 law.
Cordray said overall, the law has helped reduce problems with fees and other issues related to credit cards. But he said the ability-to-pay portion may have prevented thousands of stay-at-home parents and other people from obtaining credit cards.
He said the agency studied the issue and collected data on the problem this summer and plans to release a proposed rule soon.
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