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On Tap: Credit Card Holders’ Rights, Mortgage Relief

“Issues of the Week” will appear every Monday in Roll Call when Congress is in session. This new feature highlights the upcoming agenda and includes a quick look at the people and pressures behind the legislative activity.

The need for new consumer protections amid the financial crisis has plenty of currency on Capitol Hill, but the House and Senate are on different tracks that suggest a final legislative answer may be a long way off.

While legislation to mitigate the aftermath of the financial crisis — and determine its causes — makes its way through the House this week, the Senate will continue negotiations and may vote on a bankruptcy measure to help homeowners stay in their homes as they rebound from economic hardships.

The House this week is likely to pass legislation — the Credit Cardholders’ Bill of Rights — that would ban certain credit card practices deemed “unfair and deceptive” by consumer advocates, such as unexpected changes in interest rates without prior notice.

But House Republicans will argue the bill would make credit more expensive for those who need it and lock out riskier borrowers. The large House Democratic majority should ensure passage of the measure.

In the Senate, Majority Leader Harry Reid (D-Nev.) has said he would soon like to call up a similar credit card bill, which was narrowly approved earlier this year by the Banking, Housing and Urban Affairs Committee. But it is uncertain whether Reid could find 60 votes to move that bill under a likely GOP filibuster threat.

Plus, Sen. Tim Johnson (D-S.D.) opposed the bill in committee, meaning Democrats would need at least three GOP votes to overcome a filibuster.

Credit card lobbyists are intensely focused on blocking the Senate bill. They argue regulatory changes already being pursued by the Federal Reserve will increase consumer protection.

The House and Senate are also on different tracks for helping homeowners facing foreclosures as a result of risky mortgage lending processes.

On Tuesday, the House Financial Services Committee is expected to back legislation that would set new federal standards for mortgage originators, require loans to have a tangible benefit to borrowers and ensure that consumers have a reasonable ability to repay them.

The Senate, meanwhile, could attach controversial “cram-down” legislation, which would allow bankruptcy courts to lower interest rates and loan principal for homeowners facing foreclosure, to a larger housing bill due on the floor in the coming weeks. The House already approved the cram-down measure, but the proposal has deadlocked the Senate for more than a month.

Senate Majority Whip Dick Durbin (D-Ill.) led negotiations with banks and credit unions over the cram-down provision in recent weeks, but those talks took a hit last week when the National Association of Federal Credit Unions came out against a draft plan. Reid said he will still seek a vote on the provision as part of the larger, less controversial housing bill — even without a deal.

The Senate and the House are also moving closer to agreement on a proposed 9/11-style commission that would try to address the root causes of the ongoing financial crisis.

The Senate last week agreed to attach a provision to a financial fraud enforcement bill that would create a commission with a $5 million budget and subpoena power.

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