[Congressional Record (Bound Edition), Volume 155 (2009), Part 19]
[Senate]
[Pages 25648-25649]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            CONSUMER CREDIT

  Mr. UDALL of Colorado. Madam President, I rise today to discuss an 
issue of importance to all American consumers who rely on credit cards, 
especially during our economic downturn. More specifically, I would 
like to address two pieces of critically important legislation that 
would help consumers.
  First, last week I introduced legislation to move up the effective 
date of credit card reforms outlined in the Credit CARD Act, which was 
signed into law by President Obama in May. The act gave credit card 
issuers nine months from the date of enactment to phase out their most 
egregious practices, including arbitrarily raising interest rates, 
raising interest rates on existing balances, and charging interest on 
debt paid on time--the latter a particularly underhanded tactic known 
as double-cycle billing.
  Rather than phasing out these practices before the new requirements 
take effect, credit card issuers have increased them, squeezing as much 
as they can out of American consumers prior to the date the reforms are 
scheduled to go into effect. A Pew Charitable Trusts study to be 
released later this week will reveal that through the first 6 months of 
this year, the 12 largest credit card issuers raised interest rates an 
average of 20 percent, with many cardholders seeing rate increases in 
excess of 20 percent. This is happening despite the fact that these 
credit card companies, many of which received taxpayer bailout funds, 
are reaping the benefit--some might say government subsidy--of Federal 
interest rates at or near zero percent.
  The bill I introduced last week, the Expedited CARD Reform for 
Consumers Act of 2009, will move the effective date of enactment for 
all reforms required under the Credit CARD Act to December 1, 2009. The 
majority of reforms are currently due to go into effect on February 22, 
2010, with a few other reforms due to go into effect on August 22, 
2010.
  We all know how important short-term credit is to families and small 
businesses, especially during hard economic times. And we have all 
heard stories of people who have been victimized by the kind of unfair 
practices that the Credit CARD Act will end. But the truth is I have 
heard more stories from my constituents about these unfair and 
deceptive practices since the President signed the Credit CARD Act into 
law, than I did in the months leading up to the bill's passage. And 
that's saying something.
  Through no fault of their own, many Coloradans have been victimized 
by their credit card issuer. For example, a constituent named Jean from 
Commerce City wrote to me:

       Recently, CitiBank raised my [credit card] APR to 29.99 
     percent. I called and found out that they did not raise my 
     rate because I'm

[[Page 25649]]

     late, or have a bad FICO score, but because they sent me a 
     letter with the option to opt OUT of a higher interest rate. 
     I've had this card for over 15 years and never been late. I 
     don't understand how taxpayers gave banks taxpayer money, 
     banks report record profits, and banks still feel they can 
     [take unfair advantage of] the common Joe. Basically our 
     credit card companies took away our available credit and then 
     raised our credit card rates even though we made payments on 
     time. Please help the citizens of this country instead of 
     helping the few executives at these banks. We really need 
     your help, and in the long run this will help our country.

  Likewise, northern Colorado small business owner Ginny Teel, whose 
company 10 til 2 helps pair businesses with professionals looking for 
part-time work, recently took to the airwaves to tell a similar story. 
In a Denver television news story, Ginny reported how her credit card 
company is doubling her interest rate, from 11 percent to 22 percent, 
for no reason. Like many small businesses, Ginny relied on her credit 
card to get her business up and running. In the letter to inform her of 
the rate increase, Wells Fargo states: ``These changes are not a 
reflection of how you managed your account with us or your credit 
score.'' In other words, her credit card issuer is saying it is 
doubling her interest rate because it still can.
  I have heard from hundreds of Coloradans with similar stories since 
the Credit CARD Act was passed.
  For many American families and small businesses, credit cards are 
more than a convenience, they are a necessity. Short-term credit is 
sometimes the only way that families can pay for necessities or that 
small businesses can function. And a well-functioning credit card 
industry that treats its customers with fairness is absolutely 
essential to rebuilding our economy.
  I first introduced legislation to end unfair and abusive credit card 
practices in 2005 as a Member of the House of Representatives, and I 
was honored to be a part of finally passing real reform earlier this 
year. But I am equally disappointed that credit card issuers would now 
bleed American consumers for as much as they can prior to the reforms 
taking effect.
  My legislation is supported by consumer advocate organizations, 
including the member organizations of Americans for Fairness in 
Lending, as well as the National Small Business Association, whose 
members, like Ginny Teel, increasingly rely on credit cards for their 
small business needs.
  During debate on the Credit CARD Act earlier this year, credit card 
companies told Congress they needed more time to implement the bill's 
reforms, and Congress accommodated them. Rather than phase out these 
practices, however, credit card companies have used this extra time to 
declare open season on their customers. If credit card companies can 
increase abuse on a moment's notice, then surely they can end consumer 
abuse in short order.
  Credit card issuers have shown they cannot be trusted to act in the 
interest of the American consumer. It is time to force credit card 
companies to finally deal honestly with American taxpayers and comply 
with the reforms passed earlier this year.
  I thank Senators Schumer, Harkin, Levin, Bingaman, Tester, and 
Merkley for cosponsoring the Expedited CARD Reform for Consumers Act. 
In addition, along with Senate Banking Committee Chairman Dodd, today I 
cosponsored a bill that would immediately freeze interest rates on 
existing credit card balances. This is an important bill that will 
allow consumers to pay off their credit card debt at the interest rate 
they consented to when they took on that debt. It is a matter of 
fairness. I look forward to working with Chairman Dodd and colleagues 
from both parties to pass these important bills as quickly as possible.

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