Who's in Charge?

Exploring Issues in and Policy Solutions for Credit Card Markets

November 30, 2006, 9:00am – 10:30am

About This Event

During the last three decades, credit cards have transformed the American economy. They have revolutionized the daily mechanisms for payment and borrowing, and in the process, have contributed to the mass consumerism that distinguishes American culture and supports the health of our economy. The days of the “one credit card family” are a thing of the past, with some 1.5 billion cards in circulation today—five for every American man, woman, and child.

Not surprisingly, the rapid growth of the credit card market has been coupled with a dramatic rise in consumer debt (as of September 2006, credit card debt in the U.S. totaled $857 billion) and record profits for the industry. This relationship raises some important questions. For example, why are credit cards so much more common in America than in Japan and the United Kingdom? Why do credit card companies continue to issue cards to customers who are such bad credit risks? What aspects of credit cards most often lead consumers into debt traps? What specifically can policymakers do to solve these problems, and are these solutions politically realistic?

As part of the Center’s ongoing efforts to highlight and address consumer debt issues as a key component of our Economic Mobility Program, we have assembled a distinguished group of experts to discuss these questions and policy options for moving forward. First, Sen. Carl Levin of Michigan who commissioned the recently released GAO report entitled "Credit Cards: Increased Complexity in Rates and Fees Heightens Need for More Effective Disclosures to Consumers" will deliver opening remarks. This will be followed by a panel discussion with Ronald Mann, the author of the new book, Charging Ahead: The Growth and Regulation of Payment Card Markets, and David Wood, Director of the aformentioned GAO report on credit cards. Also, the Center's Director of the Economic Mobility Program, Derek Douglas, will discuss a new Center report regarding a safety rating system for credit cards.

Keynote Address:
Senator Carl Levin (D-MI)

Featured Panelists:
David G. Wood, Director, Financial Markets and Community Investment, U.S. Government Accountability Office
Ronald Mann, Ben H. & Kitty King Powell Chair in Business & Commercial Law and Co-Director, Center for Law, Business & Economics, University of Texas School of Law

Moderated by:
Derek Douglas, Associate Director for Economic Policy, Center for American Progress

Opening Remarks by:
Winnie Stachelberg, Senior Vice President for External Affairs

Location

Center for American Progress
1333 H St. NW, 10th Floor
Washington, DC 20005

Resources

Event Transcript

Biographies

Senator Carl Levin (D-MI) is the ranking Democrat on the Senate Armed Services Committee, where he has earned a reputation as a strong supporter of our national defense and an effective waste fighter.

Senator Levin also serves as the ranking Democrat of the Permanent Subcommittee on Investigations of the Homeland Security and Governmental Affairs Committee. For the last six years, he has directed his staff in a comprehensive money laundering investigation, which has led to strengthened U.S. anti-money laundering. In addition, Levin's work has supported international efforts to detect and stop money laundering and terrorist financing.

In 2002, as chairman of that subcommittee, Levin led Congress' most in-depth examination into the collapse of Enron. His investigation exposed how Enron used deceptive accounting and tax transactions to report better financial results than the company actually experienced. The subcommittee's investigative work contributed to the accounting and corporate reforms enacted in the Sarbanes-Oxley Act in July 2002. Levin also initiated an investigation into gasoline price spikes, and in April 2002 he issued a 400-page report and chaired hearings detailing how U.S. retail gasoline prices are manipulated. Levin is also a member of the Small Business and Entrepreneurship Committee and the Senate Select Committee on Intelligence.

Levin is perhaps best known for his efforts to make our government both more efficient and more ethical. He authored the Competition in Contracting Act, which has led to significant reductions in federal procurement costs. His Whistleblower Protection Act protects federal employees who expose wasteful practices. Levin also helped author the Taxpayers' Bill of Rights, which protects individuals and small businesses from IRS harassment. He was the principal author of the Ethics Reform Act in 1989, which simplified and strengthened ethics requirements for the legislative and executive branches of government and prohibited members of Congress from accepting honoraria from special interests. He has never accepted honoraria from special interests, and in 1995 he persuaded the Senate to adopt a strong ban on gifts to senators and paid trips.

Carl Levin was born in 1934 in Detroit, where he graduated from Central High School. In 1956, he graduated with honors from Swarthmore College and graduated from Harvard University Law School in 1959. He practiced and taught law in Michigan until 1964 when he was appointed an assistant attorney general of Michigan and the first general counsel for the Michigan Civil Rights Commission. He then helped establish the Detroit Public Defender's Office and led the Appellate Division of that office, which has become the State Appellate Defender's Office.

He won election to the Detroit City Council in 1969, becoming its president in 1973 by winning the most votes citywide. In 1978, he won an upset victory over the number two Republican in the U.S. Senate. He was reelected in 1984, 1990, 1996 and 2002.

Carl Levin married Barbara Halpern in 1961. They have three daughters: Kate, Laura and Erica, and five grandchildren. His brother Sander has served in the U.S. House of Representatives since 1983.

David G. Wood in his capacity as Director, Financial Markets and Community Investment, Mr. Wood is responsible for leading GAO audits and evaluations concerning a range of federal housing and financial issues, policies, and programs. Mr. Wood has been with GAO since 1977. For several years previous to his current position, he directed GAO's work on a variety of federal environmental issues. He has also led GAO's work on federal regulation of electric power, energy research and development, disaster assistance, and small business issues. In 1994, he led the joint effort by GAO, the Congressional Research Service, and the Congressional Budget Office in support of the Senate Bipartisan Task Force on Funding Disaster Relief. He also served as a staff assistant for a year while detailed to the Senate Committee on Agriculture, Nutrition, and Forestry. Mr. Wood received his B.S. degree in Commerce with distinction from the University of Virginia in 1975 and in 1983, his Master of Public Administration degree from The George Washington University, where he concentrated in business, economics, and public policy.

Ronald Mann is a nationally recognized scholar and teacher in the fields of commercial law and electronic commerce. He has taught at Texas since January 2003, following six years at the University of Michigan Law School and three years at Washington University in St. Louis. He also is a member of the National Bankruptcy Conference and the American Law Institute and recently served as the reporter for the amendments to Articles 3 and 4 of the Uniform Commercial Code.

Mann's book on the global credit card industry (Charging Ahead: The Growth and Regulation of Payment Card Markets) was recently published by Cambridge University Press. He also has published two widely used commercial law casebooks: Commercial Transactions: A Systems Approach (with Lynn LoPucki, Elizabeth Warren, & Daniel Keating, 2nd ed. 2003); and Payment Systems and Other Financial Transactions: Cases, Materials, and Problems (2nd ed. 2003). He also co-authored the first American legal casebook in electronic commerce: Electronic Commerce (with Jane Winn, 2nd ed. 2005). He has delivered numerous papers and published extensively in leading law journals. Representative publications include: Making Sense of Payments Policy in the Information Age, 93 Geo. L.J. 633 (2005); Regulating Internet Payment Intermediaries, 82 TEXAS L. REV. 681 (2004); Explaining the Pattern of Secured Credit, 110 HARV. L. REV. 625 (1997); Credit Cards and Debit Cards in the United States and Japan, 55 VAND. L. REV. 1055 (2002); Secured Credit and Software Financing, 85 CORNELL L. REV. 134 (1999); The Role of Letters of Credit in Payment Transactions, 99 MICH. L. REV. 2494 (2000); Strategy and Force in the Liquidation of Secured Debt, 96 MICH. L. REV. 159 (1997).

Derek Douglas is the Associate Director for Economic Policy at the Center for American Progress. At the Center, Derek also serves as Director of the Economic Mobility Program, which focuses on issues that bear directly on the economic security and social mobility of low- and middle-income families - such as debt, higher education, and housing. Prior to joining the Center, Derek was Counsel in the Strategic Counseling Practice Group at O'Melveny & Myers LLP, where he advised clients on matters with a close nexus to politics, legislation or regulation. In this capacity, Derek worked with members of Congress, administration officials, and their respective staffs in advising clients on matters involving congressional hearings and investigations, federal and state legislative developments, and international and federal regulatory enforcement issues. Before joining O'Melveny, Derek was an Assistant Counsel at the NAACP Legal Defense and Educational Fund, Inc. (LDF), where he specialized in the area of education. Derek also developed and directed legislative and community outreach efforts in support of his litigation. Derek joined LDF by way of a Skadden Fellowship, which is a public interest fellowship given each year to 25 law school graduates throughout the country. Derek graduated from the University of Michigan with Highest Honors in Economics and from the Yale Law School. After graduating from Yale, Derek clerked for the Honorable Timothy K. Lewis on the United States Court of Appeals for the Third Circuit. Derek also worked in the Economic Studies Program at The Brookings Institution as a Research Assistant to Dr. Charles Schultze.

Winnie Stachelberg is the Senior Vice President for External Affairs. Prior to joining the Center, she spent 11 years with the Human Rights Campaign, the nation's largest gay civil rights organization. In January 2005 Stachelberg was appointed to the newly created position of Vice President of the Human Rights Campaign Foundation. Charged with revamping HRC's Foundation, Stachelberg's early priorities included building a think tank, launching a religion and faith program and rebuilding the National Coming Out Project. Previously, she was HRC's political director, initiating and leading the expansion of HRC's legislative, political and electoral strategies. Stachelberg joined HRC in 1994 as senior health policy advocate and helped to establish the organization as a key advocate in HIV/AIDS, lesbian health and other health care issues affecting the GLBT community.Before joining HRC, Stachelberg worked at the Office of Management and Budget in both the George H.W. Bush and Clinton administrations, formulating and reviewing health care policies and budgets for the Department of Health and Human Services. A native New Yorker, Stachelberg taught at George Washington High School after graduating Georgetown University. She received a Master of Public Administration from George Washington University