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Dodd urges regulators: Protect consumers from new card abuses

WASHINGTON (7/10/09)--In a letter sent Thursday to National Credit Union Administration Chair Michael Fryzel, Federal Deposit Insurance Corporation Chair Sheila Bair, Federal Reserve Chair Ben Bernanke, and other federal regulators, Sen. Chris Dodd (D-Conn.) asked regulators to "immediately notify" credit card issuers in their respective jurisdictions that they would be "held accountable" for recent interest rate increases.

In the letter, Dodd also urged federal regulators to "do everything in [their] power to protect cardholders from abusive credit card practices.

It has been recently reported that credit issuers, including Citigroup, have been raising their interest rates on existing lines of credit, presumably in an effort to increase profits before new credit card regulations take effect in the near future.

Portions of the recently passed CARD Act require credit issuers to review accounts for which the interest rate has been raised every six months and, under certain circumstances, reduce the consumer's interest rate. This portion of the Act is retroactive to January 1 of this year.

Dodd asked federal regulators to remind credit issuers of this upcoming guideline, adding that "all interest rate increases that have taken place this year will become subject to the mandatory 6-month review."

Dodd also encouraged the Fed to "draft regulations that provide clear, robust requirements for the review of rate increases," adding that he expected federal financial enforcement agencies to "hold the credit card companies strictly accountable for conducting thorough reviews and decreasing rates where warranted."

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