“Ninety colleagues here voted for the bill this spring. Why wouldn’t you join us today?”

November 18, 2009

Today, Senate Republicans blocked Banking Committee Chairman Chris Dodd’s (D-CT) attempt to pass legislation to stop credit card interest rate hikes.

Dodd went to the Senate floor to ask for consent for the Senate to take up and pass his Credit Card Rate Freeze Act, which would prevent credit card companies from hiking interest rates, fees and finance charges on customers’ existing balances until Credit CARD Act protections take effect in February. Regrettably, Republican Senator Thad Cochran (R-MS) objected to Dodd’s request, blocking the bill from Senate passage.

“Consumers obviously have a responsibility to spend within our means and to pay what we owe. We bear that responsibility. But the credit card industry as well has a responsibility to deal with their customers honorably. There is nothing honorable about what’s happened with these significant rate increases and fees. Most importantly, they don’t have a right to rip off American families, especially when the Congress has already gone on record opposing the very actions they’re engaging in,” Dodd said on the Senate floor.

“This will provide us a window of about 12 weeks between now and around the first of February, during this holiday season, to just put a stop to these outrageous rates and fees being charged to people,” Dodd continued.

“Ninety colleagues here voted for the bill this spring. Why wouldn’t you join us today?”

“On behalf of several Senators on this side of the aisle, I object,” said Senator Cochran.

Dodd is the author of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, which was enacted in May and prevents arbitrary interest rate, fee and finance charge increases on a customer’s existing balance. The majority of the bill’s provisions take effect in February. “Unfortunately they’ve taken that window and used it as a way to jam in on consumers in this country. Particularly at a time when people are losing their jobs, their homes their health care, their retirement, and the holiday season is upon us,” Dodd said.

Already, the Credit CARD Act requires 45 day notification of interest rate increases, and increases from 14 days to 21 days the amount of time before a bill is due that a statement must be delivered. Dodd’s Credit Card Rate Freeze Act would force companies to immediately freeze rates, finance charges and fees on existing balances until the remaining provisions in the Credit CARD Act go into effect.

In April, Chairman Dodd and Senator Schumer sent a letter to the heads of the Federal Reserve, OTS, and NCUA calling on them to implement an emergency freeze on interest rates tied to existing balance on credit cards.

For those accounts that have already seen rate increases, the Credit CARD Act requires credit card companies to review every account that has seen an interest rate increase since January 1, 2009 and reduce rates where warranted. Dodd sent a letter to the Chairman of the Federal Reserve and the heads of key regulatory agencies in July directing them to let credit card companies know that they will be held accountable for rate increases. He also called on the Federal Reserve to provide clear, robust requirements for the reviews and called on the agencies enforcing those regulations to hold the credit card companies strictly accountable for conducting thorough reviews and decreasing rates.

###