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June 6, 2012 – NAFCU President and CEO Fred Becker pressed concerns about a Regulation Z rule on credit card applicants' "ability to repay" in a letter sent in advance of a related hearing today by the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.

The rule, which took effect last Oct. 1, was promulgated under the Credit CARD Act of 2009. It excludes household income from the factors that can be used to determine a credit card applicant's ability to repay credit card debt, but it requires that creditors take into account all household liabilities in making that determination.

"In essence, one-income households are being punished on both sides of this equation under current law," wrote Becker in a letter Tuesday to subcommittee Chairman Shelley Moore Capito, R-W.Va., and Ranking Member Carolyn Maloney, D-N.Y.

NAFCU urged against this rule while the Fed was considering it and later in comments to the Consumer Financial Protection Bureau.

"Requiring that issuers determine ability to repay based solely on personal income for applicants over 21 years of age, even in cases where there is sufficient household income to make payments, is shortsighted and will undoubtedly have a negative impact on credit unions and their 94 million members," Becker wrote in Tuesday's letter. "In all likelihood, it will have an especially disproportionate impact on women and spouses that do not work outside of the home."

Today's hearing on the CARD Act is set for 2 p.m.

Meanwhile, other hearings today address the following:

• Small Business Administration programs: SBA Administrator Karen Mills will testify before the full House Small Business Committee, chaired by Rep. Sam Graves, R-Mo., on her agency's management of its capital access programs.
• Investment adviser oversight: The House Financial Services Committee holds a hearing on H.R. 4624, the Investment Adviser Oversight Act of 2012.
• Systemic risk: The Senate Banking Committee holds a hearing on enhancing bank supervision and reducing systemic risk under the Dodd-Frank Act.