May 5, 2009
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News: Feds Say No to Emergency Action
Senator Charles Schumer (D-NY) announced Tuesday that the U.S. Federal Reserve turned down a request made by him and Senator Chris Dodd (D-CT) to execute their emergency powers by implementing an emergency freeze on credit card interest rates after their offices had been bombarded with huge numbers of customer complaints. On April 23rd, Senators Schumer, a member of the Senate Banking, Housing, & Urban Affairs Committee, and Dodd, Chairman of the Committee, sent a letter to the Federal Reserve Chairman, Ben Bernanke, and other regulators saying that action needed to be taken immediately to freeze interest rates on existing credit card balances. Such a rule has already been approved by the Federal Reserve; however, does not go into effect until July 2010. The letter also stated that it is believed credit card lenders are participating in aggressive activities to “avoid the ramifications” when the new Federal Reserve rules become effective in 2010.
Senator Schumer was outraged by the denial. In his press release, he stated "The Federal Reserve's failure to protect consumers from these outrageous rate increases is unconscionable." Additionally, he stated his intentions to quiz the Fed on why they refuse to exercise their powers to help credit card customers when in the past they have done so to benefit the financial institutions. In the rejection letter, the Fed expressed concerned that the interest rate hikes might be in response to the losses the banks are currently undergoing and not necessarily action to counteract the new rules. Either way you look at it, according to Schumer, it’s a “green light” for credit card lenders to step up their attack on Americans.
Meanwhile, lawmakers aren’t willing to wait until July 2010 to find relief for credit card customers. The House of Representatives recently passed their own legislation which includes some of the same provisions as the new Federal rules plus additional protective measures. Enthusiasts for the bill hopes to get it passed just as quickly through the Senate and on President Obama’s desk for signing by the end of the month.