Rep. Boccieri Works to Stop Credit Card Companies From Charging-Up Rates

Congressional Letter Already Has Some Credit Card Companies Promising Not to Raise Rates

WASHINGTON, DC - On behalf of 16th Congressional District constituents, U.S. Congressman John Boccieri (D-Alliance) along with eighteen of his House colleagues recently sent a letter to Citigroup Chief Executive Officer Vikram Pandit requesting major credit card companies, including Citigroup, avoid changing credit card account terms before the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act) takes effect in February 2010.

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The legislation, signed by President Obama at the end of May, includes several restrictions on credit card companies in terms of rate changes and billing procedures. In advance of these industry reforms, credit card companies are changing their policies. According to a report from the PEW Charitable Trust, credit card interest rates increased an average 20% this year through tactics by issuers including changing account agreements, revoking promotional rates, and imposing interest rate increases on existing balances including those less than 30 days past due.

The House members write in their letter, "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 . . . Such actions violate the notions of fair play and create an economic burden on a majority of consumers who are struggling to make ends meet."

Bank of America recently announced they would not implement any changes in terms of re-pricing consumer accounts before the legislation is implemented. Late last week, after receipt of the Congressional letter, Discover Financial Services announced its policy not to raise rates on credit card holders. In the letter, Boccieri and his House colleagues ask other major credit card companies to follow their example.

In response to such actions, Representative Barney Frank (D-Massachusetts) and Representative Carolyn Maloney (D-New York) introduced legislation to move the effective date of implementation of the Credit CARD Act to December 1, 2009 instead of February 1, 2010.

***Full text of the letter Boccieri signed is below.***

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 have increased an average of 20% this year from issuers 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 a majority of consumers who are struggling to make ends meet.

What makes this situation particularly difficult for lawmakers to swallow is the fact that the effective date of this legislation was set for February of 2010 to give credit card companies time to implement federal regulations - not additional time to violate the spirit of the law by hiking interest rates on consumers.

In response to such actions, Representative Maloney and Chairman Franks have suggested the quicker implementation of The Credit Card Act. 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 change in terms of re-pricing consumer credit card accounts. Bank of America's announcement is a good first step; now the rest of the industry should follow their example.

We urge you to immediately reconsider your rising credit card rate practices in light of Bank of America's decision. With additional Congressional oversight, increased media attention, pending legislation, and economically stressed constituents industry actions are creating a perfect storm for additional regulatory measures.

Sincerely,

Betsy Markey

Dina Titus

John Boccieri

Harry Teague

Shelley Berkley

Ben Ray Lujan

Steve Driehaus

Mary Jo Kilroy

Marcia Fudge

Neil Abercrombie

Suzanne Kosmas

John Adler

Phil Hare

John Salazar

Ed Perlmutter

Henry Cuellar

David Wu

Martin Heinrich

Chellie Pingree

Source: Congressman John Boccieri