MSNBC "The Ed Show" - Transcript

Interview

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PRESIDENT BARACK OBAMA: (From videotape.) There has to be strong and reliable protections for consumers, protections that ban unfair rate increases and forbid abusive fees and penalties. The days of anytime, any-reason rate hikes and late-fee traps have to end.

MR. SCHULTZ: Welcome back to "The Ed Show." I don't know what you wanted to hear, but that's exactly what I wanted to hear. The president went face to face with credit card executives today. He is concerned that our tax dollars that are keeping the banks afloat, and at the same time they're nailing credit card-holders with exorbitant rate increases and fees.

In the last year, 70 million credit card customers have seen their rates go up. That's one in four. The rate fee hikes for card- holders are $10 billion and counting.

Will consumers finally get a fair shake when it comes to credit cards? Joining us tonight is the chairman of the Senate Banking Committee, Senator Chris Dodd of Connecticut. He sent a letter to Fed Chairman Ben Bernanke today asking that the Fed freeze credit card rates immediately.

Senator, good work. We needed that. Here is what you wrote: "We strongly urge you to utilize your emergency powers to put this rule into place immediately and protect consumers from these outrageous rate increases."

Senator, do you think you're going to get a positive response to this?

SEN. DODD: Well, we hope so. In fact, I was joined by Senator Chuck Schumer in that letter to the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration as well, to ban retroactive rate increases. Our bill that we hopefully will bring up in the next couple of weeks does that. But there's an opportunity, because the Federal Reserve has actually issued a rule to do just that, but you'd have to wait until July of next year for that rule to go into effect.

Under what, Ed, is called the good cause provision of the Administrative Procedures Act, you can, in fact, take immediate action. In fact, it's been used quite frequently since 2007 in a number of other areas. So we're asking these agencies to use those emergency powers to make a difference for consumers right away.

We don't need to wait until 2010. These rate increases, as you point out, have been used in 70 million cases. One in four families have watched their rates go up in the last 11 months, and every indication that's going to continue for the next year and a half. So let's take action today and stop this procedure.

MR. SCHULTZ: So the issue here is you want to put the brakes on what they're doing until you can get the legislation that is going to be fair to consumers.

SEN. DODD: Correct. It moves it up so you could do it immediately. You don't have to wait until next year.

MR. SCHULTZ: Okay. Now, what you want to see happen in the industry and what the Banking Committee has been talking about, are you in accord with what the president said today?

SEN. DODD: Well, certainly his language, he didn't get involved in endorsing particular provisions. But I enjoyed hearing him saying, "No more of this anytime, any-reason clause," which is used far too often to have rate increases go into effect. And certainly these late fees are fees that are unfair that are being imposed on consumers. It used to be the credit card industry made its money with interest rates. Lately, over the last number of years, they're making their money with penalty interest rates and fees, penalty fees that they're imposing on them, as you pointed out in setting up this story.

MR. SCHULTZ: Yeah.

SEN. DODD: We want to change a lot of that. I'm not against credit cards. You're not against them, Ed. They're a great tool for people in need. But frankly, the industry is abusing consumers. They've been doing it year in and year out. I've been at it for 20 years. Finally we have an opportunity. These are predatory lenders, in my view. They did it in the real estate market. Now they're doing it with credit cards.

MR. SCHULTZ: Well, Senator, I'm not only not against them. I don't know how to function without them. (Laughs.) The American people, I mean, we just count on these. This is just the way of life right now. And I appreciate you doing what you're doing on this and calling for this immediate action.

How soon do you think the Fed chair would move on this, if he does?

SEN. DODD: Well, he could move within literally days or less. I mean, they have the power to act quickly. And as I pointed out a minute ago, they've not been hesitant to use emergency powers, as we've known over the last seven or eight months. Since this matter all became public back in September, they've been utilitizing emergency powers to put in place actions to try and get our economy back on track. They have the authority. They can use it. They have used it. This is a classic moment. But if they wanted to make a difference for consumers, they could put this ban on retroactive rate increases immediately and really save a lot of money for a lot of people who are struggling today to keep their families together financially.

MR. SCHULTZ: Senator, great to have you on with us tonight.

SEN. DODD: Thanks.

MR. SCHULTZ: Thanks so much, Senator Chris Dodd, here on "The Ed Show."

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