HARRY HUGHES, Governor

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Moreover, Senate Bill 861 does not provide that a credit
grantor extend a line of credit to at least equal the amount of
the security deposit required of the account holder. Therefore,
a much greater deposit could be required that has little or no
relationship to the amount of the credit line extended. For
example, a $600 deposit could be required for a $300 line of
credit. This would be unfair to Maryland consumers seeking to
establish an acceptable credit record when credit cannot be
obtained through traditional channels.

These latter two concerns, the ambiguity contained in the
bill regarding the accrual of interest and the omission of a 1:1
credit-to-deposit requirement, are both significant consumer
protection provisions which should be included and clearly
stated.

Finally, Senate Bill 861 was represented to the General
Assembly as a possible vehicle for the transfer to Maryland of a
secured credit card operation offered by a particular company in
Delaware. It is important to note that under current law the
plan offered by this company is permitted in Maryland. The sole
difference created by the enactment of Senate Bill 861 would be
the number and types of additional fees that could be imposed on
these accounts. While I would encourage this company to move to
Maryland and take advantage of our existing revolving credit
provisions, I could not do so at the expense of opening an entire
new area of consumer credit without adequate protection for the
public.

Therefore, because of the absence of key consumer protection
provisions, the uncertainty created by the legal ambiguity
contained in the bill, and the philosophical departure from
current Maryland law represented by the possibility of charging
three new fees on secured open-end credit accounts, I have
decided to veto Senate Bill 861.

Sincerely,
Harry Hughes
Governor

Senate Bill No. 861

AN ACT concerning

Open End Credit - Fees and Charges

FOR the purpose of authorizing a credit grantor to impose on a
consumer borrower certain fees and charges under any open
end credit plan not secured by a lien on residential real
property secured by certain deposit, savings, passbook or