WASHINGTON, July 9 (Reuters) - The chairman of the Senate Banking Committee on Thursday called for regulators to draft new regulations that would require credit card companies to review rate hikes since the start of this year.
Christopher Dodd, a Democrat from Connecticut, said he has been disturbed by recent reports that credit card companies are trying to raise rates on customers’ existing balances before a new law limiting that practice goes into effect next year.
In a letter to Federal Reserve Chairman Ben Bernanke and other regulators, Dodd asked that they draft and enforce rules that will make credit card companies follow through on a provision of the new law designed to prevent such rate hikes before the law starts affecting the companies.
That provision calls for credit card companies to review every six months any account where the interest rate has been raised since January 1, 2009. It also directs the companies to reduce the rate if the customer has become less of a credit risk or the circumstances that warranted the increase are no longer present.
“The look-back provision will serve as a deterrent only if it will be implemented and enforced effectively,” Dodd said in the letter.
The regulators generally must draft rules to implement new requirements that Congress passes.
In May, Congress passed a package of rules to crack down on unfair and deceptive credit card practices such as surprise fees and rate increases.
Most of the provisions of the law will go into effect in February 2010. (Reporting by Karey Wutkowski, editing by Matt Daily)