Senator Proxmire - 2. June 8, 1973 As is true for all such issues, it needs to be dealt with in a broader context. For example, a tax program like the "negative income tax" might well reduce the "riskiness" of consumers by stabilizing incomes, thus eliminating a major (perhaps the major) source of payment difficulties and reducing substantially the cost of extending credit. Such a comprehensive approach is not always possible, however, as is the case here. We must deal with less sweeping changes to a system of regulatory limitations. Under such circumstances, few changes made will benefit everyone concerned and we are forced to make decisions that will benefit one group at the expense of another. That being the case, we should at least be clear about the "who" and the "how much" of such changes, lest we make them under the guise of benefiting all concerned. And this is no easy task. For my own part, I plan to spend much of my time in the near future trying to put my work together in a more comprehensive framework and have arranged academic leave this year to that end. The year following, I plan to be in Washington, D. C. I hope you will feel free to call on me for assistance or opinion, if you feel any of my work will be of use to you. Again, my thanks for the opportunity to appear before the Senate Banking, Housing & Urban Affairs Committee on May 24. I hope my testimony was of some value to you and the other members of the Committee. Sincerely, Salt Wankelberg William C. Dunkelberg WCD/1fg Enclosure CREDIT CARD USE SURVEY 1. Please circle below the number of store, gasoline, bank or other credit cards or credit accounts you presently have and use at least once a year. (PLEASE CIRCLE ONE ANSWER IN EACH ROW BELOW) 2. 3. Do you have a checking account with overdraft privileges (that is, can you write checks for more than the balance in your account and pay it back as a loan with interest)? Yes No 10. Which category below best describes the highest level of schooling you have completed? 12. 13. 55-64 30-34 Please place an "x" on one line below to show which group includes your approximate yearly or weekly personal salary before any deductions are taken out. What other sources of income does your household have in addition to your salary? (More than one box may be checked). Spouse employed part-time Spouse employed full-time Pension Interest or investment earnings Income from rental property Part-time job of chief wage earner Other (Please explain). None (SKIP TO QUESTION 15) 14. Please place an "x" on one line below to show the approximate yearly income of your entire household before taxes, including all salaries and other income. 17. On the average, how many times a month do you and others in your household use credit cards or credit accounts? Less than 5 times a month 5-9 times a month 10-14 times a month 1519 times a month 20 or more times a month 18. In an average month, how much do you usually charge on all of your credit cards? $. 20. Have any of the credit card bills sent to you in the past year by the following types of credit card issuers contained mistakes? 21. 22. Are there any billing practices of credit card issuers that you would like to see changed? Yes No If yes, please explain When you decide to pay only part of your balance on your department store credit account, what is the annual percentage rate of finance charge (APR), per year? On balances up to $500 On the portion of the balance above $500 Don't know % % Thank you very much. Please return this survey form in the postage paid envelope. Senator PROXMIRE. Thank you very, very much. Our next witness is an old friend of the chairman, Mr. Arthur Wood, the chairman of the board of Sears, Roebuck. I have known Mr. Wood for longer than I think he would like me to say. STATEMENT OF ARTHUR M. WOOD, CHAIRMAN OF THE BOARD, SEARS, ROEBUCK & CO., ACCOMPANIED BY LLOYD MCCLELLAND, SECRETARY AND GENERAL COUNSEL, AND H. R. LIVELY, MEMBER OF GENERAL CREDIT OFFICE Mr. WOOD. Not at all, Senator. Senator PROXMIRE. Forty years at least. Mr. Wood. I think we both still think young, I hope. [Discussion off the record.] Senator PROXMIRE. You didn't even need transplants to look young, either. Mr. Wood. You and I know it is hereditary. [Discussion off the record.] Senator PROXMIRE. Go right ahead. Mr. Wood. Thank you, Senator Proxmire, Senator Bennett. I would like to introduce my colleagues, Lloyd McClelland, who is vice president and general counsel of Sears, and Randy Lively, who is a member of our general credit department in Chicago. It is a privilege to appear before you, and I appreciate this opportunity to speak briefly with respect to S. 914, and S. 1630. We at Sears feel that the need for this type of legislation is diminishing. Responsible remedial action by the business community, including Sears is, in our judgment, eliminating the need for legislatively mandated recourse for billing error complaints. A bit of historical perspective on whether there is a need for billing complaint legislation, and I would like to review the specific provisions of the two bills then. During the latter part of the 1960's, we had a number of billing error problems, and attention was focused on billing practices of creditors. There were a number of reasons why billing error problems aroused the ire of the public and were being aired in the public forum. A new segment of the credit card industry, the bank credit card, was in the throes of becoming established and at the same time established creditors had to turn to the use of computers in order to contain escalating costs, and to keep pace with the growing demand for credit. The computer, rather than being hailed as a very fast billing machine, was shrouded in an aura of mystery and was castigated from every quarter as a villainous device. In reality, it was only one of people willing to use a new and better tools. |