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Frank pushes early start for credit law

Barney Frank asserts that lenders have abused a grace period by using the time to increase credit card rates. Barney Frank asserts that lenders have abused a grace period by using the time to increase credit card rates.
Associated Press / October 9, 2009

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WASHINGTON - Representative Barney Frank, the tough-talking liberal ushering through a major rewrite of rules governing Wall Street, sounded a warning yesterday to big banks: Start playing nice or Congress will make your life even more difficult.

Last spring, Frank helped push a bill through Congress that imposes strict new rules on lenders, including a limitation on when and how banks increase rates. Most of the rules will take effect in mid-February, a date set by Congress to give banks time to prepare for the changes.

But the Massachusetts Democrat, who chairs the House Financial Services Committee, said at a hearing yesterday that lenders have abused the grace period by using the time to increase rates ahead of the new rules. He has introduced legislation that would move up the enactment date to Dec. 1.

“It is very clear that this is the kind of protection that shouldn’t wait and we should move forward,’’ Frank said .

Frank also said he is open to providing relief to merchants that pay heavy fees to banks in exchange for accepting credit cards. The hearing was primarily focused on legislation by Vermont Democratic Representative Peter Welch that would regulate those fees.

Some lobbyists have speculated that Frank’s sudden interest in Welch’s bill is a warning to banks to tone down their opposition to his broader effort to impose new consumer protections. The financial industry has launched a multimillion-dollar effort to try to defeat legislation backed by Frank and President Obama that would create a regulator to police the fine print on such products as credit cards and mortgages.