Although the Federal Reserve finalized new regulations that will limit various credit-card rate increases last December, the rules won’t come into effect until July 2010, and there is now mounting pressure to implement the regulations at a much earlier date.

Not surprisingly, the banking industry says that both the White House and Congress should wait for the Fed’s new rules to take effect before taking any additional action, and Edward Yingling, who is president of the American Bankers Association, said last Sunday, “The banking industry understands the concerns about credit cards, but the administration should fully recognize the impact of the Federal Reserve Board regulation, which is one of the strongest consumer protection regulations ever adopted. As we go forward we need to be careful about piling on rules that very much may have the impact of restraining the availability of credit”.

Democratic lawmakers have already begun advancing legislation that would limit certain credit card fees and other practices and Larry Summers, who is scheduled to meet with the heads of several of the largest U.S. credit card issuers at the White House on Thursday, recently said on NBC’s ‘Meet the Press’, “The president is going to be very focused, in a very near term, on a whole set of issues having to do with credit-card abuses”, and then added, “their abuses include charging consumers extraordinarily high rates that they wouldn’t have paid if they knew what they were getting themselves into”.

Summers’s comments were also underlined by White House spokeswoman Jen Psaki who said, “Addressing abuse in the credit card industry and standing up for consumers is a priority for the president and his economic team, and we look forward to working with Congress on these issues”.

Whereas banks claim that market conditions and changes in borrowers’ credit scores necessitated the increases, consumer advocates want new legislation that would not only limit rate increases on existing balances, but would also require credit card companies to provide more information on their rates, and they are particularly critical of banks that raised interest rates whilst receiving federal bailout funds.

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