Two members of the Senate Banking Committee today called on federal regulators to implement an emergency freeze on credit card interest rates.
Senate Banking Committee Chairman Christopher Dodd, D-Conn., and Sen. Charles Schumer, D-N.Y., wrote Federal Reserve Board Chairman Ben Bernanke, Office of Thrift Supervision Acting Director John Bowman and National Credit Union Administration Chairman Michael Fryzel today urging them to use emergency authority to implement the freeze.
The agencies have issued rules banning the practice of retroactively raising interest rates on credit card balances. The rules are scheduled to take effect in July 2010.
“Credit card providers have been aggressively raising rates on consumers now to avoid the ramifications of this rule when it goes into effect next year,” Mr. Dodd and Mr. Schumer said in their letter. Both senators said they have received complaints from constituents whose rates have doubled or tripled recently.
“This kind of practice clearly violates the spirit and intention of the rules, even if the delayed implementation date has the effect of making such behavior legal,” the senators wrote in their letter.
The Senate Banking Committee has approved a credit card bill that would include the Fed’s planned rule change and implement it sooner. A similar bill, introduced by Rep. Carolyn Maloney, D-N.Y., was approved by the House Financial Services Committee this week.