Boccieri Calls On Wells Fargo To Reverse Unfair Rate Hikes

Press Release

On the heels of a strongly-worded letter to the CitiGroup CEO requesting major credit card companies, including Citigroup, avoid changing credit card account terms before federal regulations on the industry take effect early next year, U.S. Congressman John Boccieri (D-Alliance) today with 17 of his House colleagues 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).

In their letter, the Members wrote, "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. 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, [Wells Fargo] 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."

Further, the Members commented, "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."

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 the letter Congressman Boccieri signed is below. ***

October 14, 2009

Mr. John Stumpf
Wells Fargo Chief Executive Officer
420 Montgomery St
San Francisco, CA 94163

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

John Boccieri
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

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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