HARTFORD, Conn. (Legal Newsline) - Connecticut Attorney General Richard Blumenthal has demanded an explanation from the U.S. Federal Reserve as to why it failed to meet this week's deadline to roll back credit card interest rate and fee increases.
Blumenthal said that the Fed's failure to act demonstrated a "disturbing disdain for ordinary consumers," claimingthat the public perception of the Fed's philosophy is "billions for bankers, crumbs for consumers."
"The Fed's failure to meet a deadline vital to consumers facing billions in unjustified and arbitrary interest payments is inexplicable and inexcusable," Blumenthal said.
"The Fed never misses a deadline important to big banks, but it fails without explanation or apology to issue on time rules critical to consumers."
Blumenthal demanded an explanation from Federal Reserve Chairman Ben Bernanke on the failure to issue regulations that would enable roll backs of huge interest rate increases and called for a time frame to do so, adding that he will fight to reverse interest rate hikes.
The Fed is empowered by the Credit Card Accountability Responsibility and Disclosure Act of 2009 to review and order roll backs on credit card interest rate and fee increases that are considered unjustified.
The CARD Act, which went into effect on Monday, was praised by Blumenthal, but he warned that loopholes still remain and urged Congress to close them.
"Consumers must beware that gaping loopholes remain. Credit card issuers can still increase your rate on new balances, although they must give 45 days' notice," Blumenthal said.
"They can still create junk fees, phony charges for low usage, foreign transactions, balance transfers and paper statements. Consumers should watch their cards carefully and dump issuers who create new ways to gouge them."
To fight these loopholes, Blumenthal has proposed imposing stricter limits on mandatory charges, including annual and application fees, which can be as high as 25 percent of the cardholder's credit limit.