A local credit card company fought the Consumer Financial Protection Bureau and is coming out on top.
It looks like the CFPB is backing down on an issue contested by Premier Bankcard.
President Barack Obama named Richard Cordray head of the newly formed Consumer Financial Protection Bureau this year. The new watchdog group for consumers has its work cut out for it, from new mortgage laws to enforcing credit card rules.
"We're in our infancy. We're just a few months old. Most people don't know much about us yet. But we're there to stand on their side and help them. So, we want them to come to us," Cordray said.
One of the issues taken up by the CFPB was enforcement of the CARD ACT of 2009, which limited rate increases and fees by creditors. Subprime lender Premier Bankcard, located in Sioux Falls, sued the CFPB along with the Federal Reserve over the cap on upfront fees and got an injunction.
"It was a rule we inherited and the court did decide that that language was different from what the Federal Reserve had thought it was. So, we are mindful of court decisions and that's the kind of issue that, I think, will be worked out satisfactorily over time," Cordray said.
The CFPB is now proposing to amend the regulation, which currently limits fees to 25 percent of the credit limit before the account is opened and during the first year after it's open. The CFPB's proposal would limit the fees only during the first year after the account is open. And that's a victory for Premier Bankcard, which wants the freedom to charge whatever it can before someone opens an account.
"It's a balance for us. We take a lot of input from industry, from financial institutions, including Premier and others we've worked with and from consumer groups, and we're trying to get that balance right," Cordray said.
The CFPB will take public input on the regulation change until June 11.
When KELOLAND News told Premier Bankcard about the proposed change to the regulation in their favor, the company responded by saying it was being reviewed by its attorneys.