Dodd Feels the Freeze of a Rate Freeze Proposal

The state's senior senator may be trying to curry some favor among voters, but the measure isn't expected to go anywhere.

Updated 3:30 PM EST, Mon, Oct 26, 2009

Print Email Share TWITTER FACEBOOK

Sure, it might be nice if credit card companies would keep their interest rates steady. But alas, it looks like Sen. Chris Dodd's attempt to force their hand isn't going anywhere.

Dodd, who chairs the Senate Banking Committee and is in a fight for his political survival, proposed the legislation Monday. But business-minded Democrats are expected to join Republicans in casting the measure as draconian and unnecessary.

Capping rates would cut bank profits and, they say, would worsen the economy.

Political observers say the proposal seems aimed at reconnecting Dodd with voters here in his home state, many of whom have questioned his close ties to big banks. The Senate Ethics Committee has cleared him of violating any rules in connection with a sweetheart loan deal. His poll numbers remain shaky.

"At a time when families are struggling to make ends meet, jacked up rates can quickly create crushing debt," Dodd said in a statement. "People need to be responsible with their money, but they shouldn't be taken to the cleaners by outrageous rates."

Congress has already passed legislation that puts new rules for credit card lenders into effect come mid-February. The law, signed by President Barack Obama in May, limits when and how banks hike rates. It does not set a cap on the amount of interest lenders can charge.

But many progressive Democrats, including Dodd, say that banks have been hiking rates ahead of the new rules. The House was expected to vote soon on legislation that would move up the enactment date to Dec. 1.

While that measure was expected to pass the House, its prospects in the Senate are dim. Banks are telling lawmakers that they need more time to implement the changes.