Earlier this month, the Federal Reserve proposed new rules for the credit card industry to restore something that had been severely lacking in the way lenders conduct business: fairness.

If enacted, the regulations would be the most sweeping change in decades, offering consumers more protection against late fees and preventing lenders from making credit card offers that regulators say are deceptive. The new rules would ban common practices such as "double cycle billing" and arbitrary interest hikes.

Millions of Americans are buried up to their necks in credit card debt. To some extent, of course, this can be attributed borrowers' lack of self-discipline. But in many cases, the problem is magnified by the policies of the lenders.

For example, in double cycle billing, lenders calculate one month of fees based on two previous months' worth of activity on an account. Lenders also would be prohibited from arbitrarily raising interest rates on any debt unless a promotional rate expires or the borrower is more than a month late making payments.

The credit card industry once faced greater controls, but when interest rates rose sharply in the 1970s, banks lobbied for a relaxation of the rules, claiming they hurt profits and reduced the credit. Congress went along, and the industry gradually adopted the practices in place today.

But since the Democrats took control of Congress last year, lawmakers have begun to take a new look at the industry. Sen. Christopher Dodd, D-Conn., introduced a measure this month to curb credit card abuse, and Rep. Carolyn Maloney, D-N.Y., chair of the House Financial Institutions and Consumer Credit Subcommittee, has introduced what she calls the Credit Cardholders' Bill of Rights.

While congressional reformers praise the Fed for its proposed regulations, they note that many of the final versions of the changes, if approved, won't go into effect until next year. The rules also might be watered down, as lobbyists for lenders exert pressure on the Fed. The American Banking Association already has called the rules a "regulatory intrusion" into the market.

While we agree that the Fed's efforts are commendable, Congress needs to act now rather than wait for the Fed to change the rules. By the time the Fed finalizes its regulations, millions more cardholders could be buried in debt with no way to dig themselves out.

Lenders have far too free a hand in adopting unscrupulous policies that prey on borrowers, often without fully informing them of changing credit rates. Congress has a responsibility to rein in the industry and protect consumers, and we hope lawmakers will stand up to the banking lobby for the financial welfare of credit card holders and the nation as a whole.

IN SUMMARY

Congress needs to address the issue of abusive credit card policies by nation's lenders.

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