Schauer Co-Sponsors Bill to Freeze Unfair Credit Card Rate Hikes, Protect Consumers
Congressman joins colleagues in urging bailed out Wall Street firms to stop taking advantage of responsible customers
WASHINGTON,
Oct 30 -
Today Congressman Mark Schauer (D-MI) co-sponsored the Credit Card Rate Freeze Act, legislation that would immediately freeze interest rates on consumer credit card accounts ahead of federal credit card reform legislation slated to go into effect early next year. Earlier this week, Schauer joined 45 of his House colleagues in sending a letter to the CEOs of Bank of America and Citigroup, which together have received $45 billion in federal bailout funds, urging them to reconsider their decision to charge new credit card fees on customers in good standing.
“Rather than helping small business owners obtain credit to create Michigan jobs and stabilize our economy, these credit card companies are taking advantage of responsible consumers who helped finance their bailouts,” said Schauer. “This is why I voted against the Wall Street bailout in the first place, and why I’m committed to holding these companies accountable and protecting consumers.”
Congressman Schauer was a co-sponsor of the Credit Card Accountability Responsibility and Disclosure Act of 2009, which aims to curb unfair and deceptive credit card lending practices and was signed into law earlier this year. It is slated to go into effect in February of 2010.
The Credit CARD Act requires 45 day notification of interest rate increases and lengthens from 14 days to 21 days the amount of time before the due date that a statement must be delivered. The bill Rep. Schauer co-sponsored today would force companies to immediately freeze rates on existing balances until the remaining provisions in the Credit CARD Act go into effect.
A constituent from Battle Creek wrote in this week to explain that his credit card interest rate from Citibank was going up from 6.99% to 29.99% on all charges, past and present. He said, “This will possibly cause me to declare bankruptcy. [My wife] and I are unemployed and she is now going through Chemotherapy. I have been with Citibank for over ten years and have never once been late or over drafted. No one can pay off a balance at 29.99%.”
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A copy of Schauer’s letter to the CEO’s of Bank of America and Citigroup is available below.
October 28, 2009
Mr. Kenneth Lewis
Bank of America Chief Executive Officer
100 North Tryon Street
Charlotte, NC 28255
Mr. Vikram Pandit
Citigroup Chief Executive Officer
399 Park Avenue
New York, NY 10022
Dear Mr. Lewis and Mr. Pandit,
We have received numerous complaints from our constituents regarding unreasonable credit card interest rate changes prior to the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) reforms.
Three weeks ago, we sent letters to credit card industry leaders urging them to follow the example set by Bank of America, who announced they would not increase their credit card interest rates prior to the effective date of the Credit CARD Act. The Today Show and USA Today are now reporting that Bank of America will begin charging customers an annual fee for not carrying a balance. Even more troubling, the reports also reveal that Citigroup has already begun charging consumers who maintain balances below $2,400. These reports are especially disappointing and further erode any good faith left in the industry.
While we understand that your companies have been struggling to stabilize during this economic downturn, penalizing consumers for maintaining responsible credit practices is both absurd and unfair. Bank of America and Citigroup have each received $45 billion in federal bailout funds over the last year. We urge you to consider those consumers, whose tax dollars funded your bailouts, and who dutifully pay their bills on time and are now struggling to make ends meet.
This practice may also bring unintended consequences for credit in America, as a consumer’s credit score is negatively impacted by closing a credit card account. Many Americans may choose to cancel their accounts rather than pay additional fees for being responsible customers, which could further destabilize the credit card industry. In a time when businesses are struggling to maintain their customer base just to survive, the credit card industry seems openly disdainful of the hard working Americans who comprise theirs.
The Credit CARD Act does not prohibit these new fees; however, this legislation has brought many of these credit card practices under scrutiny and highlighted the gaps in consumer protection. We will continue to evaluate these practices to determine if further legislative action is warranted.
Finally, we would like to remind you that consumers and businesses drive the American economy. It is in our country’s best interest to ensure they can weather this economic crisis. Wall Street banks have received hundreds of billions of dollars of taxpayer money while families and small businesses on Main Street face a severe credit crunch and rising unemployment. With additional Congressional oversight, increased media attention, pending legislation, and economically stressed constituents, we feel that Bank of America and Citigroup have made very poor decisions. We urge you to immediately reconsider your decision to institute new credit card fees on customers in good standing.
Sincerely,
Betsy Markey, Betty Sutton, John Salazar, Larry Kissell, Ed Markey, Marcia Fudge, Grace Napolitano, Chris Carney, Michael Arcuri, Chellie Pingree, Phil Hare, Joe Courtney, Carol Shea-Porter, Bruce Braley, Mark Schauer, Dina Titus, Steve Cohen, Paul Tonko, Eric Massa, Elijah Cummings, Harry Teague, Maurice Hinchey, Mike Doyle, Alcee Hastings, Dale Kildee, Lois Capps, Allen Boyd, Jan Schakowsky, Marcy Kaptur, Barbara Lee, Pete Stark, Mike Quigley, Chaka Fattah, Judy Chu, Mazie Hirono, John Olver, John Conyers, Bob Filner, Yvette Clark, Kathy Dahlkemper, Jesse Jackson, Stephen Lynch, Ben Chandler, Danny Davis, Chris Van Hollen
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