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This year, Congress passed tougher regulations for the credit card industry, hoping to provide relief for consumers. Some of the laws minor provisions took place back in the summer. But cardholders should brace for more pressure before the primary protections kick in. Some credit card companies are raising rates and reducing credit limits before the rules take effect on February 22nd. Democratic Congressman Barney Frank of Massachusetts is the chairman of the House Financial Services Committee. He was one of the lawmakers who pushed for the new regulations, and he joins us now to talk about this new development. Welcome to the program, sir.

Representative BARNEY FRANK (Democrat, Massachusetts): Thank you.

NORRIS: Does this fall into the category of unintended consequences? Did you...

Rep. FRANK: Oh no, not at all.

NORRIS: Did you anticipate this might happen?

Rep. FRANK: We were afraid it might happen, but there were two things. First of all, the only way for it not to happen was to not pass the law. You cannot allow private entities to blackmail you into never passing the law. Secondly, an unintended consequence is something that happened because of what you did. They are not exercising any powers that they did not already have. They couldve done all this and presumably would have whether we passed the bill or not.

Now, we did have a political compromise. I wanted the bill to go in effect more quickly, the Federal Reserve said, oh, well, they need time and others said they needed time. I was skeptical, but we dont always get all the votes we want on every issue.

NORRIS: Congressman, you said that the banks - some of the banks have abused this period that they were supposed to use to retool their practices. How have they abused the system?

Rep. FRANK: By raising the rates. We told them that we wanted to put this into effect and that we thought these things were fair. We ought to stress, by the way, whats the single unfairest thing that we went after: this situation whereby you get a credit card, you were told what the rate is, you go out and you make purchases and you owe money according to the contract you signed. And even though youve made every payment you were supposed to make, retroactively theyre raising interest rates on what they already charged you. And we thought that was outrageous, and we did believe that they would not keep doing that. And I think to continue to raise the rates retroactively, thats very abusive to consumers. Thats what we are putting an end to.

NORRIS: Now, we should say the credit card companies say these hikes and these rate cuts are not in any way a rush to beat the new regulations.

Rep. FRANK: Right.

NORRIS: They say that this is really a way that they need to cover the costs of all the losses that theyve been hit with because of the recession. Is there truth to that?

Rep. FRANK: Oh no, I agree with that, by the way. They aren't doing these things because we passed the bill. On the other hand, once we passed the bill, they should have abided by it, and they said, look, give us more time because we have to redo our algorithms, et cetera.

NORRIS: But youre saying it sounds like theyre saying give us more time so we can make as much money as we can before the new regs come into effect.

Rep. FRANK: Yes. Give us more time so we can not abide by the law. We said you should abide by this law. They said, okay, but we, you know, we agree we have to abide by the law, but its going to take us time to figure these things out. And I think they lied about that.

NORRIS: Were heading into the holiday shopping season, a time when people might be more likely to reach into their wallets and pull out those credit cards. What should people who use credit cards be doing right now when their statements come in the mail? What should they be looking for?

Rep. FRANK: First of all, shop around for different credit cards. People have not done that. And we think that some credit card companies will be willing to do that. Secondly, if they can, either pay cash or - and this is a way they do it - pay off your credit card bill before the time expires. You know, the credit card companies hate that. They dont like people who pay off the whole bill every month.

NORRIS: Congressman Frank, always good to talk to you. Thank you very much for your time.

Rep. FRANK: Youre welcome.

NORRIS: That was Democrat Barney Frank, chairman of the House Financial Services Committee.

We asked the American Banking Association for its response to his claim that credit companies lied about the need for more time to adjust to the new regulations. The association sent us this statement: As of August 20th, card issuers must provide a 45-day advance notice of any rate increase and give customers the option to decline the increase and pay off the balance over time at the original rate. Rates are going up for new accounts and new transactions in part because of the economy and in part because of the new rules, which Congress understood would cause rates to increase and credit card credit to be less available.

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