U.S. Representative Barney Frank, in a weak attempt to build dialogue with big banks, warns them that Congress will rewrite the rules unless banks start playing nice.
Last spring, Frank helped push a bill through Congress that imposes strict new rules on lenders, including a limitation on when and how banks hike rates. Most of the rules will take effect in mid-February, a date set by Congress to give banks time to prepare for the changes.
But the Massachusetts Democrat, who chairs the House Financial Services Committee, said at a hearing on Thursday that lenders have abused the grace period by using the time to hike rates ahead of the new rules. He has introduced legislation that would move up the enactment date to Dec. 1.
"It is very clear that this is the kind of protection that shouldn't wait and we should move forward," Frank said about the new credit card rules.
Frank added that he is open to providing relief to merchants that pay heavy fees to banks in exchange for accepting credit cards from their customers.
Banks contend that tougher restrictions and the creation of a new federal regulator will hurt the availability of credit. In an effort to counter the backlash in Congress and elsewhere, some banks have announced they will adopt consumer-friendly policies on their own.
This week Bank of America Corp. pledged not to hike credit card interest rates or fees before February.
Frank called Bank of America's promise "welcome" but added that lenders have otherwise abused the grace period given to them by Congress. Further, he said, the bank's pledge was an indication that credit card companies could be forced to comply with the law sooner than planned, according to the Associated Press' report.