'We Helped You, So Don't Raise Credit Card Rates'
Going to bat for the nation's credit card users, Congressmember Carolyn Maloney has asked the major credit card issuers to delay their intended consumer credit card rate increases in light of the current economic recession.
Joined by Congressmember Keith Ellison (D- Minnesota), who co-chairs the Consumer Justice Caucus with Maloney (D- Queens/Manhattan), the lawmakers appealed to the top executives at Citi Bank, Capital One, Bank of America and JP Morgan.
Maloney declared, "It's wrong that financial institutions that received billions in taxpayer aid are leaving struggling consumers out in the cold this holiday season. The federal government has done its part to help Wall Street, but Main Street isn't seeing the benefits it was supposed to get."
The lawmakers pointed out that the federal government has helped these banks to the tune of a collective $300 billion in capital reserves so they can increase lending to their customers.
Ellison said, "For these banks to raise rates on taxpayers, on the one hand, while taking handouts from them on the other, is the height of hypocrisy. These banks have gone to the American people hat in hand in their time of need. Now it's time for them to return the favor."
Th lawmakers pointed out that since the beginning of the federal government's intervention in the financial credit markets, the largest credit card issuing banks have received more than $300 billion in government funds as an incentive to increase consumer lending. Media reports have said that Citi Bank, which recently received $49 billion in government funds, along with $306 billion in loan guarantees, intends to raise the rates on its consumer credit cards by at least two to three percentage points.
Meanwhile, the lawmakers told the banking leaders, Americans are facing the grim reality during this holiday season, of economic problems not experienced in generations.
Included in this chilling picture, they noted, is unemployment soaring to levels not seen in more than 15 years, real wages steadily declining and consumers forced to rely more and more on their credit cards.
"In light of these conditions, we write to express our grave concern of the recent reports of large scale credit rate increases— a move that should be reconsidered, given the harsh situations facing consumers across the nation," the legislators wrote.
Meanwhile, the Federal Reserve Bank had made several moves favorable to banks, consumer debt has shown signs of decreasing and, Maloney and Ellison pointed out, "Credit card issuing banks have received over $300 billion in capital reserves from the federal government."
When taken together, the lawmakers stated, "We strongly feel that these conditions should provide a basis for at least a freeze, if not a decrease, rather than an increase in the credit card borrowing rate. On behalf of our constituents and the American public, we urge you to reconsider any possible increases you are contemplating.
"We would request you take into account the whole host of supportive measures put in place by the federal government to increase consumer lending and promote the resumption of economic growth."