Days from Reform, Dodd Tears into Credit Card Issuers

Sen. DoddDays before the landmark legislation he helped write takes effect, Sen. Christopher Dodd unleashed some tough words against credit card issuers for raising rates and fees in the nine-month “grace period” leading up to the Feb. 22 compliance.
The Credit CARD Act, as the reform is known, was signed into law by President Obama in May. Dodd, D-Connecticut, chairman of the Senate banking committee, was its chief author. He visited Hartford yesterday.
“They used this time to gouge people,” Dodd told the Hartford Courant newspaper. “They’ve raised rates; they’ve imposed fees; they’ve done everything they can to squeeze every nickel out of people in this country in this sort of grace period.”
Before he was blocked by Republicans, Dodd attempted to push through a temporary interest rate freeze on credit card accounts in November. He was reacting to anger from consumer groups and fellow Democrats who decried pre-reform interest rate hikes, reductions of credit limits and the cancellation of accounts on customers who under-use their cards.
Dodd warned that lawmakers would be keeping a close eye on the card issuers’ post-reform actions.
“We’re going to be looking at what other steps that they may take to engage in practices that would once again abuse the relationship with people that hold their cards,” Dodd told the paper.
Banks have said they raised rates in response to increases in bad loans, or charge-offs, which have climbed with higher unemployment, the foreclosure crisis and a lingering recession.
The reform legislation creates a first-ever general ban against interest rate hikes on existing fixed-rate credit card balances; restricts certain fees; and increases protections for under-age credit consumers.

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