Wednesday, May 6, 2009
The U.S. Federal Reserve rejected a request to force credit card companies to immediately halt retroactive interest-rate increases on existing balances, Democratic Senator Charles Schumer said on Tuesday.
Schumer and Christopher Dodd, who chairs the Senate Banking Committee, asked the Fed last month to use its emergency powers for rescuing banks to also help credit card consumers being slapped with unexpected rate increases.
“The Federal Reserve’s failure to protect consumers from these outrageous rate increases is unconscionable,” Schumer said.
“The Fed has acted swiftly to use its emergency powers to steady teetering financial institutions. It is fair to ask why they won’t use the same powers to aid American families who are at just as great a risk.”
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A Fed spokeswoman did not have an immediate comment.
In a letter to Schumer, Fed Chairman Ben Bernanke, who has called credit card practices “unfair and deceptive,” said credit card issuers have been “encouraged” to comply with the Fed’s final rules as soon as possible.
He also said shortening the implementation date of the Fed’s rules could cause issuers to overreact by cutting the availability of credit and costing consumers more to use a credit card.