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(Washington D.C.) – Today, U.S. Senator Patty Murray (D-WA) delivered the following speech on the floor of the Senate urging passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009. Senator Murray also discussed the importance of financial literacy, and her bi-partisan Financial and Economic Literacy Act of 2009.

“Thank you, Madam President.

“Mounting debt is taking a big toll on families throughout the nation. That’s why, over the past few weeks, we have passed bills to stop mortgage scams, prosecute corporate fraud, and to lower fees for homeowners and help them into stable mortgages.

“Today, Madam President, we have an opportunity to continue to put Main Street first. Over the last several months, I have heard credit card horror stories from families all over my home state of Washington. 

“I’ve heard from people who have paid their cards on time but saw their supposedly “fixed” rates skyrocket unexpectedly, or who had their minimum required payment double with no notice. I’ve heard from families who were one day late on their minimum payment – so the card company hiked up their rate and charged them a late fee, which put their card over their credit limit – and that incurred yet another fee.

“I’ve even heard from people who say their credit card company raised their minimum payment, and when they called to complain, they were offered their lower minimum payment – but only if they accepted a dramatic increase in the rate.

“With so many struggling just to make ends meet, it is especially important that we stand up to protect families from excessive credit card fees, unexpected hikes in interest rates and minimum required payments, and constantly changing credit card agreements that are designed to make profit by keeping families in debt.

“That’s why we need to implement the Credit Card Accountability, Responsibility and Disclosure Act, or CARD Act, to help protect consumers from predatory and misleading lending practices.

“The CARD Act requires credit card issuers to give 45 days notice of rate increases, and to provide clear disclosure of term changes when accounts are renewed. 

“It prohibits so-called “Double Cycle Billing,” where interest is assessed on the whole debt, even when a portion was paid on time.

“It prevents card companies from using a contract clause to raise consumers’ rates at anytime for any reason they choose.

“And it prohibits companies from issuing credit cards to anyone under the age of 21 unless the application is co-signed by a parent or guardian, or the underage consumer completes a certified financial literacy course.

“We will bring fairness to the system by stopping financial institutions from taking advantage of consumers with hidden charges and misleading terms.  No one should have to be surprised by changes to interest rates or their minimum payments. These steps will help to level the playing field, and will save families thousands of dollars a year.

“This bill addresses a number of the things that are keeping credit card users in debt.  And it is a good start. But, Madam President, at the same time we strengthen protections for credit card users, we need to make sure that people are empowered to make responsible decisions about their financial future.  

“Put another way – it’s not enough to prevent credit card companies from changing the rules when too many Americans don’t know the rules in the first place. The reality is that over the last several years too many Americans have made poor and – very often – uninformed financial choices. Too many over-estimated their resources, didn’t read the fine print, and didn’t grasp the terms of their financial responsibilities before signing on the dotted line.

“In fact, Madam President, we need to recognize that too many Americans – from college students to senior citizens – are “financially illiterate.”  I recently heard from a constituent in Spokane County whose daughter had applied for credit cards shortly after she turned 18.  She had very little income, and had difficulty making some of the payments on time. 

“One of her cards had a $500 limit, but instead of the bank declining purchases that would exceed the limit, each purchase went through – and the bank charged a $37 fee for each one.  Another bank charged her $7 every day because she had a $20 overdraft.  And she didn’t have any hope of paying these debts on her own.

“These are problems that could have been avoided if she had understood her financial responsibilities and the terms of her financial agreements. That’s why I have introduced bipartisan legislation to make sure we help people develop the skills they need to make sound, informed financial decisions – from signing up for credit cards to taking out a mortgage to planning for retirement.

“Madam President, the Financial and Economic Literacy Improvement Act of 2009 will require the federal government to step up to the plate and become a real partner in helping Americans manage their finances and make good, informed financial decisions.

“This bi-partisan bill, co-sponsored by Senator Cochran, will give young people the tools to make informed decisions about credit cards and student loans, understand the importance of saving, and have the knowledge to plan for a comfortable and dignified retirement down the road.

“We used to say the three ‘R’s’ of school are “reading, writing, and arithmetic.”  Well, I think we need to add a fourth ‘R’ – “resource management.”

“Madam President, under our financial literacy bill, the federal government would become a strong supporter of making financial literacy education a core part of a K-12 education.  

“The bill would authorize $125 million annually for state and local education agencies, and their partnerships with organizations experienced in providing high-quality financial literacy and economic instruction. 

“This funding would help make financial literacy a part of core academic classes, develop financial literacy standards and testing benchmarks, and provide teacher training.  It will also help schools weave financial concepts into basic classes, like math and social studies.

“And the training would not end in high school – this bill makes the same investment in teaching financial literacy in our 2- and 4-year colleges.

“Mr. President, whether it’s skyrocketing interest rates on credit cards, an adjustable-rate mortgage they can no longer afford, or a retirement plan that they don’t understand, I often hear the same thing: “I wish they had taught this stuff in school.”

“The financial literacy bill would ensure that we are teaching it in school, and it would help people learn basic skills that will give them a leg up when dealing with their banks and credit card companies.

“Madam President.  Let me be clear.  Credit is not a bad thing. When used correctly, credit can be a lifeline to the American Dream.

“It can provide entrepreneurs with the startup funds to become small business owners, small business owners with the capital to grow into bigger businesses, and families with the financial security to plan their futures.

“But at this important time in our history, as we reflect on our financial practices, it’s important that we work to restore credit card responsibility, for lenders and consumers. And that is why I’m working to support this bill and my financial literacy legislation.

“Just like consumers and families can’t afford unforeseen rate hikes and exorbitant credit card fees, we can’t afford for our young people to not understand their own finances.

“I would like to congratulate Chairman Dodd on crafting the CARD Act, and I urge the Senate to pass it this week.

“And I look forward to continuing to put the priorities of Main Street first and following through with the next step, passing the Financial and Economic Literacy Improvement Act.”