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Credit card rate freeze killed

Democrats say companies used window to raise fees

By Robert Moore / Coloradoan

An attempt to freeze credit card rates and fees until more strict regulations take effect in February died Wednesday in the Senate when Republicans blocked an attempt to speed the bill through.

“The last thing our families need are higher interest rates and extra fees, especially on consumers who are already playing by the rules,” Sen. Mark Udall, D-Colo., said in urging his colleagues to approve a unanimous consent request that would have allowed an immediate vote on the bill.

But Sen. Thad Cochran, R-Miss., objected “on behalf of several senators on this side of the aisle,” killing the request.

Udall and Rep. Betsy Markey, D-Fort Collins, had been among the congressional leaders trying to push through a freeze on credit card rates and fees until the provisions of the Credit Card Accountability, Responsibility and Disclosure Act passed earlier this year take full effect in February 2010.

The House passed a version of the bill earlier this month, but Wednesday’s Senate action was the death knell for the freeze effort.

“I’m extremely disappointed that the financial health of millions of American taxpayers has been completely brushed aside by a handful of Wall Street banking interests in the U.S. Senate,” Markey said. “I opposed bailing out these banks, and I am appalled at the utter disdain with which these companies are treating their customers.”

Republicans didn’t explain their decision to block a vote on the bill Wednesday beyond Cochran’s short objection. A GOP spokesman didn’t respond to a Coloradoan request for comment.

Some Senate Democrats — particularly from South Dakota and Delaware, key states for the credit card industry — also have objected to efforts to freeze rates or further limit the industry.

Sen. Chris Dodd, who authored both the Credit CARD Act and the measure to freeze rates until it took effect, attempted to have the bill heard under unanimous consent, which meant it would have been heard without the possibility of filibuster or amendment.

A Democratic source, who asked not to be identified because the source wasn’t authorized to speak on the issue, said Dodd used that unusual route because President Barack Obama has asked Senate Majority Leader Harry Reid to bring the health-care bill to the floor this week.

Using normal procedures for Dodd’s bill would have allowed opponents of the health-care legislation to tie up the Senate for at least three days discussing the credit card freeze, pushing the health-care debate back at least to next week, the source said.

But requesting unanimous consent made the credit card freeze easy to kill.
The Credit CARD Act passed the House and Senate by comfortable margins earlier this year, and would restrict credit card companies from raising fees on existing balances and making other changes without advance notice to credit card customers.

The bill’s provisions are phased in over a period of several months, with the most stringent requirements not taking effect until early next year. But this summer, after the bill’s passage, most of the largest credit card issuers began raising rates and fees in advance of the new regulations, drawing the ire of many in Congress.
A Rasmussen Reports poll released this week said half of all cardholders in the country had seen their rates increase in the past six months.

“Knowing that the Credit CARD Act would finally protect consumers from these abuses, the industry has tried to make one last grab for their customers’ pocketbooks,” Dodd, D-Conn., told the Senate on Wednesday.

“The reason we allowed a gap period between the passage of the legislation and the imposition of the regulations or the statutory requirements was because the industry came to me and said, you know senator, we’re going to need some time to administer, to change how we provide these kinds of benefits to people. So would you give us a little window here to operate?” Dodd said.

“Unfortunately, they’ve taken that window and used it as a way to jam in on the consumers of this country,” he said.

A spokesman for the credit card industry said earlier this month that they have complied with all provisions of the new law and that any attempt to freeze rates or move up the effective date of the regulations “will further restrict access to credit for both consumers and small businesses, all to the detriment of the broader economy.”
Udall said on the Senate floor, “This has been a classic case of a David vs. Goliath situation … and I say it’s time to take on Goliath and stop credit card companies from gaming the system at the expense of American consumers.”

Colorado’s other senator, Democrat Michael Bennet, was a co-sponsor of the Senate freeze legislation along with Udall.

“Hard-working families continue to get hit by unfair interest rate hikes as credit card companies make a last ditch effort to turn a profit. Colorado families need relief from these practices, and they need it now,” he said in a statement after the bill died.

Dodd said during the discussion that the economic downturn has made many Americans more reliant on credit cards, particularly with the holidays approaching.

“Consumers obviously have a responsibility to spend within our means and to pay what we owe. We bear that responsibility,” he said from the Senate floor. “But the credit card industry as well has a responsibility to deal with their customers honorably. There’s nothing honorable about what’s happened with these significant rate increases and fees.”