Statements on Introduced Bills and Joint Resolutions

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

Mr. DURBIN. Mr. President, I am delighted to be working with my friend the distinguished Senator from Hawaii, Senator Akaka, to introduce a measure that provides a simple yet vital commodity to users of credit cards. The commodity I speak of: information.

The modern-day credit-reporting system has benefitted consumers by making affordable credit more widely available than ever before, and the spread of credit cards is an important part of this "credit revolution." Along with this revolution in credit availability, however, we need a revolution in consumers' ability to manage their credit. Two facts provide a quick and simple snapshot of our progress in that regard. In the fourth quarter of 2003, the number of delinquencies on regular consumer loans went down. That same quarter, the number of past-due credit card accounts hit an all-time high. Clearly, an increasing number of credit card holders need to do a better job of responsibility managing their credit exposure.

This bill is designed to help them to do just that by providing that vital commodity, information. It would require credit card statements to provide information that will help consumers understand the relationships among their total balance, the minimum payment due, and the accumulation of interest over time. Specifically, this bill would require that statements provide the following information: the amount of time it would take to pay off the total balance if just minimum payments are made each month; the total cost to the consumer that would be incurred over that time period, broken into interest and principle; the payment amount that would be necessary each month to pay off the total balance in three years; and a toll-free telephone number consumers could call to get a referral to a legitimate, accredited, non-profit credit counseling agency.

We would like to think that the credit card companies would be glad to provide whatever information their consumers needed to responsibly manage their credit. The fact of the matter is, though, that they do not provide the information I just described, and chances are they will not begin doing so on their own initiative. These numbers are not all that hard to calculate. A few lines of computer code is all it would take. And yet provision of these three simple numbers would provide a huge payback by helping credit card users quickly and easily get a clearer understanding of the size of their balance and what the consequences will be for them-in terms of time and financial cost-of carrying that balance.

Let me be extra clear about one thing: This bill will help markets for credit work better. As Adam Smith told us, the free flow of information is an absolute prerequisite of an efficient market. For markets to work, buyers must know and understand what they are buying. When our bill becomes law, credit card holders-who are simply buyers of credit in the marketplace-will have a better understanding of what exactly they are buying into, for the long term. The result can only be that the credit markets will better serve us, and that our households and our Nation will be on stronger financial footing.

I thank my friend Senator Akaka for working with me on this important measure. I am also delighted that my friends Senator Schumer and Senator Leahy have joined us as original cosponsors. I urge the rest of my colleagues to join us by cosponsoring this bill.