Connecticut Attorney General's Office
Press Release
Attorney General Asks All Attorneys General To Join Him In National Call To Roll Back Abusive Massive Credit Card Interest Rate Hikes
December 17, 2009
"We can save consumers from these damaging rate increases," Blumenthal said. "The CARD Act empowers the Federal Reserve to compel banks to roll back arbitrary interest rate and fee increases to January 1, 2009 levels.
"As consumer advocates, we can form a powerful coalition and call on Chairman Bernanke to issue Federal Reserve rules implementing the law -- which the Fed is drafting now -- that compel card issuers to reverse all interest rate and fee increases unless consumers missed or were late making payments.
"Card issuers are exploiting and gaming a nine-month delay in the effective date of the Credit Card Accountability Responsibility and Disclosure Act (CARD Act). They have arbitrarily hiked credit card fees and interest rates as high as 30 percent -- flagrantly mocking and evading the spirit of the law. After February 2010, the new law prohibits the very increases issuers are imposing. These sky-rocketing rates and fees are unnecessary as well as unjustified because lending costs are at a historic low."
Earlier this week, Blumenthal sent letters to 11 of the largest credit card issuers demanding they voluntarily roll back these rates. He also called on the ABA, the nation's largest banking lobby, asking for a straightforward explanation for the increases and to urge its members to reverse the damage.
On Wednesday, Blumenthal was the first to call on Chairman Bernanke to use his authority to draft rules to roll back these abusive rates to Jan. 1, 2009 levels.
"The banks cannot be trusted to do the right thing on their own," Blumenthal said. "Even after accepting billions in taxpayer bailout money, these card issuers are betraying the same taxpayers who provided a lifeline -- thanking them by sinking them deeper into debt, and impeding progress towards economic recovery. Burdened by sudden and lasting job loss, many responsible card holders are now unable to afford these rates and fees. The abuses are exactly what Congress sought to avoid in adopting the CARD Act."
Specifically, Blumenthal is seeking support in urging the Board to draft rules to implement Section 148 of the Truth in Lending Act (TILA) as amended by Section 101(c) of the CARD Act that will mandate a meaningful review of interest rate increases imposed by card issuers since January 1, 2009. Such rules must require a rollback in interest rate increases instituted since January 1, 2009 where the statutorily required review indicates no adverse conduct by the card holder.
Blumenthal said, "Consumers making payments on time and otherwise complying with the terms of their credit card agreement should not be penalized with a higher interest rate or other fee increases.
"The Federal Reserve is expected to issue rules implementing the CARD Act in late January or early February at which time the public can comment on them. I plan to submit formal comments when the rules are announced.
"In the meantime, we must immediately respond to these crushing interest hikes as a unified force, calling on the Federal Reserve to fulfill its responsibility to protect consumers and our economy."