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| Congressman Teague Continues Fight Against Unfair Credit Card Rate Hikes in Letter to Wells Fargo |
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Teague: Stop 3% rate hike on the backs of New Mexico’s families
Washington, DC —Wednesday, Congressman Harry Teague sent a letter to the Chief Executive Officer of Wells Fargo bank, calling on him to reverse his bank’s recent decision to suddenly increase rates on their customers by 3 percent, and join other credit card companies who have pledged to not increase rates in advance of the effective date of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act). According to their website, Wells Fargo is the largest financial institution in New Mexico.
“When most of the families in my district are counting every dime to make sure they make it through these tough economic times, Wells Fargo’s decision to raise rates on their customers now in order to get around critical reforms is just plain wrong,” said Congressman Harry Teague “There is no question that our financial industry must recover for the health of our economy, but placing yet another economic burden on the backs of consumers isn’t the answer.”
The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act) is a tough new consumer protection measure that provides American consumers with increased protections against unfair, deceptive, and anti-competitive credit card practices. The Credit CARD Act was signed into law by the President on May 22nd, 2009. It is slated to go into effect in February of 2010.
Full text of Congressman Teague's letter:
October 14, 2009 Mr. John Stumpf Wells Fargo Chief Executive Officer 420 Montgomery St Dear Mr. Stumpf, We have received an increasing number of complaints from our constituents regarding some credit card companies, including Wells Fargo, suddenly and unreasonably raising rates in advance of the effective date for many of the reforms contained in the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act). Last week, 18 Members of Congress sent a letter to some of the major credit companies which detailed recent practices of the credit card industry raising interest rates to unreasonable levels, which would be prohibited under the Credit CARD Act. The industry’s response has been varied. We were pleased to hear that Discover Financial Services will not initiate any change in terms of re-pricing of credit card accounts from October 8th to the effective date of the Credit CARD Act. However, the response from Wells Fargo is perplexing. First, there was an announcement that Wells Fargo would be ending over-limit fees. Then Mr. Kevin Rheign, Group Executive Vice President for Wells Fargo, informed The Associated Press that the bank would be raising its interest rates by 3 percentage points in advance of the law. This was a highly disappointing announcement. According to recent stress tests by the federal government, it was determined that Wells Fargo needs an additional $13.7 billion to remain well capitalized. Through an additional stock offering your company raised $8.6 billion in capital. The difference is $4.9 billion; various economic journals have quoted some executives saying that the difference would be raised through earnings. We all know that Wells Fargo, the 8th largest credit card company in the United States, has been affected like all Americans by the downturn in our economy. In fact, your company had to take $25 billion in TARP funds. While nothing less than a full recovery of the American banking industry is in all of our best interests, there must be a better way to raise the capital difference than upon the backs of struggling consumers. We strongly urge you to immediately reconsider your decision to raise credit card interest rates in light of Bank of America and Discover Financial Services’ decisions. With additional Congressional oversight, increased media scrutiny, pending reform legislation, and American families struggling to weather this financial storm, we feel that Wells Fargo has made a very poor decision. Sincerely, Betsy Markey Member of Congress Harry Teague Member of Congress John Salazar Member of Congress Neil Abercrombie Member of Congress Marcia Fudge Member of Congress Maurice Hinchey Member of Congress Chellie Pingree Member of Congress John Boccieri Member of Congress Martin Heinrich Member of Congress Mary Jo Kilroy Member of Congress Linda Sanchez Member of Congress Betty Sutton Member of Congress Eric Massa Member of Congress Paul Tonko Member of Congress John Olver Member of Congress Dina Titus Member of Congress Mike Quigley Member of Congress Anne Kirkpatrick Member of Congress ###
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