UPDATE:US Sen Dodd Seeks Immediate Rate Freeze On Credit Cards
27 October 2009 - 6:39AM
Dow Jones News
A top U.S. Senate Democrat moved Monday to impose an immediate
freeze on credit card interest rates, as congressional Democrats
continue their ongoing efforts to rein in perceived industry
abuses.
Sen. Christopher Dodd (D., Conn.), who chairs the Senate Banking
Committee, introduced a measure that would freeze rates on existing
balances until February, when tough new rules for the industry are
slated to go into effect. Too many companies are using the delayed
implementation of the new standards, which were passed by Congress
in May, to push through aggressive rate and fee increases, Dodd
said.
"No sooner had it been signed into law but credit card companies
were looking for ways to get around the protections," Dodd said in
a statement.
The measure is part of a populist push by Dodd, a fifth-term
senator expected to face a tough re-election battle with Republican
Rob Simmons, a former U.S. congressman, next year. His ties to the
financial services industry and a loan program at the former
Countrywide Financial Corp. have hurt his standing with voters,
despite being cleared of violating Senate ethics rules in the
mortgage loan issue.
Dodd has responded by even more aggressively embracing consumer
issues that he has previously advocated for in the past. He joined
with four other Senate Democrats last week to introduce a bill
cracking down on checking-account overdraft fees and has said a new
consumer financial protection agency will be a centerpiece of his
committee's efforts to overhaul regulation of the financial
services industry.
Those efforts, along with his being a key voice on health care
issues, appears to be helping with voters. A Sept. 17 Quinnipiac
University poll showed Dodd's disapproval rate among Connecticut
voters was at 49%, his best score in six months, and that he'd
narrowed the gap with Simmons to 5 percentage points in a potential
head-to-head race in 2010.
Dodd's latest legislation is part of a broader effort by
congressional Democrats to crack down on what they see as gaming of
the new rules by card issuers. Reps. Barney Frank (D., Mass.) and
Carolyn Maloney (D., N.Y.) have authored legislation in the House
of Representatives that would move up the effective date of the new
restrictions from February to December.
Frank, who chairs the House panel that approved the
accelerated-date bill last week, has said he was disappointed that
card firms had pushed through rate increases ahead of the new rules
after asking lawmakers for extra time to comply with the new
standards.
Maloney, in a statement released last week, said that "the card
companies brought this on themselves."
Republicans have opposed the industry crackdown, but with only
limited effect. The House measure would be limited to credit card
firms with more than 2 million cards in circulation and would
exempt gift cards.
-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273;
michael.crittenden@dowjones.com