Report to the Congress on Practices of the Consumer Credit Industry in Soliciting and Extending Credit and their Effects on Consumer Debt and Insolvency

摘要

Issuers of revolving consumer credit in the form of credit cards use increasingly sophisticated tools to identify potential customers on the basis of their expected ability and willingness to repay. With the development of this 'customer segmentation' process, lenders have been able to extend credit cards to a growing number of customers with an increasingly wide range of credit characteristics. Access to revolving credit provides consumers with a convenient mechanism to purchase goods and services, and such credit has in part replaced more cumbersome and less convenient forms of credit. However, the expansion of revolving consumer credit has raised concerns that it may sometimes be made available to consumers who are not capable of repaying and that the accumulation of such debt may contribute to consumer insolvency. Section 1229 of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires the Federal Reserve to report to the Congress on the methods by which issuers of consumer credit choose the consumers they solicit for credit and how issuers choose the consumers to whom they will provide credit; the report is to pay particular attention to how consumer credit issuers determine whether a consumer will be able to repay the debt. It also requires the Federal Reserve to report on whether the industry's practices in these matters encourage consumers to accumulate additional debt. Finally, it requires the Federal Reserve to report on the effects of credit solicitation and extension on consumer debt and insolvency. This report is submitted in fulfillment of the Federal Reserve's obligations under section 1229 of the act.