Wednesday, October 7, 2009

Washington, D.C. – Congresswoman Dina Titus of Nevada and Congresswoman Betsy Markey of Colorado spearheaded an effort to send a letter to the heads of credit card companies today urging them to reconsider rate increase practices in advance of the Credit CARD Act taking effect.

In response to complaints from their constituents, the Members wrote:

“Many of these unreasonable increases would be prohibited under the Credit CARD Act.  The implementation of these necessary reforms should not be taken as an indication that the industry should take advantage of consumers now before the prohibitions come into effect…

“What makes this situation particularly troubling is the fact that the effective date for the majority of these provisions in this legislation was set for February of 2010 to give credit card companies time to implement the new federal regulations – not additional time to violate the spirit of the law by changing the terms of agreements, including raising interest rates on consumers.”

Below is the text of the letter.

October 7, 2009

Vikram Pandit
Citigroup Chief Executive Officer
399 Park Avenue
New York, NY 10022

Dear Mr. Pandit,

We have received an increasing number of complaints from our constituents regarding practices in the credit card industry unreasonably raising rates in advance of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) reforms.  As you know this critical legislation was signed into law by President Obama several months ago.

Many of these unreasonable increases would be prohibited under the Credit CARD Act.  The implementation of these necessary reforms should not be taken as an indication that the industry should take advantage of consumers now before the prohibitions come into effect.  According to a report by The Pew Charitable Trust, interest rates for cardholders have increased an average of 20% this year from issuers who are rapidly changing account agreements, revoking promotional rates, and imposing interest rate increases on existing balances, including those less than 30 days past due.  Such actions violate the notions of fair play and create an economic burden on our constituents, many of whom are struggling to make ends meet.

What makes this situation particularly troubling is the fact that the effective date for the majority of these provisions in this legislation was set for February of 2010 to give credit card companies time to implement the new federal regulations – not additional time to violate the spirit of the law by changing the terms of agreements, including raising interest rates on consumers.

In response to such actions, Representative Carolyn Maloney and Chairman Barney Frank have suggested that quicker implementation of The Credit Card Act is necessary.  Representative Maloney has introduced H.R. 3639, which has been referred to the House Committee on Financial Services.

Yesterday, Bank of America announced that due to concerns from their customers, they would not implement any changes to customer agreements that would re-price consumer credit card accounts.  Bank of America’s actions are a good first step; now the rest of the industry should follow their example.

We urge you to immediately reconsider your practices regarding raising credit card rates prior to the full implementation of the Credit CARD Act.  We encourage you to follow the appropriate and responsible example set forth by Bank of America.

Sincerely,

Betsy Markey                                                                         Dina Titus                             
Member of Congress                                                            Member of Congress

Ed Perlmutter                                                                        John Salazar
Member of Congress                                                            Member of Congress

Shelley Berkley                                                                      Mary Jo Kilroy
Member of Congress                                                            Member of Congress

Steve Driehaus                                                                      Harry Teague
Member of Congress                                                            Member of Congress

John Adler                                                                              Suzanne Kosmas
Member of Congress                                                            Member of Congress

Ben Ray Luján                                                                       Marcia Fudge
Member of Congress                                                            Member of Congress

Neil Abercrombie                                                                  Martin Heinrich
Member of Congress                                                            Member of Congress

Henry Cuellar                                                                        David Wu
Member of Congress                                                            Member of Congress

John Boccieri                                                                         Phil Hare
Member of Congress                                                            Member of Congress

CC:
JPMorgan Chase & Co
American Express Co
Capital One Financial Corp
Discover Financial Services

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Tags: economy