By Jim Wasserman
The Associated Press

SACRAMENTO, Calif. - California's attempt to warn credit card customers about possible added costs and high debt burdens has ended in failure after a judge threw out the law, fearing it meddled in the business of banks.

State authorities called Monday's ruling a setback for consumers, especially college students and middle-income Californians who typically make minimum payments and contend with years of debt.

The law had required credit card firms to tell customers who make the lowest possible payment for six straight months how long it would take at that rate to pay off their debt. The warnings would have appeared on customers' monthly statements.

Advocates originally hailed the bill, sponsored by the New York-based Consumers Union and signed by Gov. Gray Davis on Oct. 10, 2001, as a national legislative victory.

But attorney Howard N. Cayne, who represents a consortium of major U.S. banks, praised the permanent injunction against the law issued Monday by U.S. District Judge Frank C. Damrell. Damrell, saying bank regulation is largely a federal arena, ruled that states cannot add costly new rules.

Five major credit card companies, including Citibank, Chase Manhattan, MBNA America Bank, First USA and Household Bank, argued the warnings would add millions of dollars in new costs and drive customers' minimum payments higher.

"California was attempting to exercise authority that Congress has granted exclusively to the federal regulatory agencies," Cayne said Tuesday.

A spokeswoman for California Attorney General Bill Lockyers said officials were reviewing the ruling for a possible appeal.

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On the Net:

Read the original bill, AB865, at http://www.assembly.ca.gov