Thursday, July 2, 2009

What to make of Citi's credit card moves?

By Jim Kim

This might shape up as an important test case of what it means to be a big bank that's owned heavily by taxpayers. The Financial Times reports that Citigroup has boosted interest rates on 15 million co-branded credit card accounts a few months before curbs on such increases are put into effect. The increase affects customers who failed to pay their balance in full at the end of the month; their rates rose by an average of 24 percent, nearly 3 percentage points.

Some lawmakers are miffed. One told FT: "It's hard to tell if rate hikes on existing balances being put in place now are the result of prior bad business decisions or getting in under the wire of the new law." We'll see how this goes over with the Treasury and the Fed. Recall that Citigroup has been forced to take various action in the past by its handlers. Almost humorously, it was forced to support a proposed rule that would give judges more say over bank issues in bankruptcy proceedings, when it had previously been a staunch opponent.

(Bloggers Note: Didnt that part of the bill that would allow BK judges to modify loans get removed?)

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