Senators Sort Out Curbs on Credit Cards

Wall Street Journal
May 6, 2009
Reddy, Sudeep
P. A4

A bill that seeks to prevent credit card companies from changing interest rates or other terms on consumers who make timely payments is being reworked after winning approval from the Senate Banking Committee in late March. Senators are butting heads when it comes to how much leeway the industry should be given with regard to rate hikes or credit limit reductions. Senate Democrats want to restrict their reach unless consumers are delinquent, while Senate Republicans argue that credit card companies should be allowed to adjust terms based on risk. Some senators are calling for caps on interest rates or limits on future rates, but House Financial Services Committee Chairman Barney Frank (D-Mass.) opposes such a move. However, Frank does support a ban on retroactive interest rate hikes. Meanwhile, Federal Reserve Chairman Ben Bernanke turned down a request from Sen. Charles Schumer (D-N.Y.) and Senate Banking Committee Chairman Christopher Dodd (D-Conn.) to immediately implement credit card reforms that will go into effect next year, noting that such a move could prompt credit card companies to boost rates right away.