Could Congresswoman Markey’s angry letters to credit card companies do more good than her legislation?
U.S. Congresswoman Betsy Markey, a Democrat from the Fourth District, led a group of 42 members of the House in sending an angry letter to Bank of America and Citigroup this week. In advance of legislation that will control how and when companies can raise customer fees, the companies have decided to start raising customer fees!
On the same day that she fired off her most recent angry letter, Markey introduced legislation that would freeze credit card interest rates immediately. The legislation mirrors that introduced by Sen. Chris Dodd, D-Conn, and co-sponsored by Colorado Democrat Sen. Mark Udall.
But some have pointed out that since the House and Senate bills are so different, there is little hope of passing them anytime soon. And Ben Bernanke, chairman of the Federal Reserve, wrote a letter detailing the problems with moving up the effective date of the new credit card law:
Bernanke said advancing the date could be tough on companies and would prevent the Fed from getting feedback on its proposed new rules cracking down on fees.
Given the pundits’ dour predictions about this legislation, perhaps Markey’s letters—and the publicity surrounding them—will do more good than any attempt to pass new laws in advance of February when the original new credit card laws take effect?
Markey’s letter chastised Bank of America, which has announced it will begin charging an annual fee to customers who pay their credit card balance every month. The letter also chastised Citigroup for a decision to charge an annual fee to customers who carry a balance of less than $2,400. That’s according to several news reports, including The Today Show:
Though Markey allowed in her letter that she understands times are tough for businesses, times do not appear to be that tough for Citigroup and Bank of America. Bloomberg News is reporting that the two paid top executives an average of $18.2 million last year, even as the companies accepted $45 billion each from taxpayers.
Average pay for managers at the two companies, which have not yet repaid their rescue funds, was almost double that of the other five bailed-out companies reviewed by [Treasury Department paymaster Kenneth] Feinberg.
Three weeks ago, we sent letters to credit card industry leaders urging them to follow the example set by Bank of America, who announced they would not increase their credit card interest rates prior to the effective date of the Credit CARD Act. The Today Show and USA Today are now reporting that Bank of America will begin charging customers an annual fee for not carrying a balance… These reports are especially disappointing and further erode any good faith left in the industry.
Will credit card companies respond to Rep. Markey? Probably yes– and then they’ll likely hike their rates. In any case, kudos to Markey for putting the interests of the people above the interests of the financial industry and making it clear yet again that the “free market,” the way it stands, is a lot more free for corporations than it is for consumers.