The Credit CARD Act, which contains numerous provisions regulating the credit card in industry in the name of consumer protection passed both houses of Congress and received a Presidential signature.  It’s law.  It just doesn’t kick in until February of 2010.

As anyone who’s studied the credit card industry for more than fifteen seconds would’ve guessed, the banks have responded to the impending change in regulations by doing everything they possibly can to wring extra money out of consumers.  When you know that you only have a few months to grab the cash with both hands, after all, you’re going to do it.

That has, predictably, led to a number of complaints as card issues jack up interest rates and/or switch to variable rates, slap everyone they can with late fees, roll back rewards programs and act just like the evil monsters critics have long claimed them to be.  It’s been a case of self-fulfilling prophecy, in a way.  By casting the banks as the Ultimate Villain and then giving them a known deadline before they need to change their evil ways, the card issuers have played the role, doing everything they can within the existing, looser regulatory framework to turn a buck.  Jeff Gelles at the Philadelphia Inquirer summarizes:

Yes, card issuers such as Citibank and Chase will have to quit a set of practices that regulators and lawmakers have finally outlawed as unfair or deceptive.

But not right away. In a concession to the arguments of the card industry that it needed lots of time to adjust, most of the new rules were delayed until February. Some won’t take effect until August.

The result? According to a new study by the Pew Charitable Trusts, the nation’s dozen largest card issuers – led by banks that taxpayers have spent billions to bail out – have doubled down on the practices that got them in trouble in the first place.

Flabbergasted by their response to pending changes, many have wondered if we might be better off putting the CARD Act into effect earlier than planned.  The banks claim that’s unfair–they’re gearing up for the date they were told to expct–and that they may not be able to comply with all of requirements if the CARD Act was activated ahead of schedule.  That’s a debate we’ve discussed here before and while I’m not a big fan of the banking industry (especially with respect to their behavior in the arena of credit cards), they do have a point.  That’s one reason why you didn’t see a mad rush for early CARD Act implementation after Barney Frank floated the idea awhile back.

Well, those who’d like to keep the banks in line until February have cooked up another option.  A Senate Bill prohibiting increases in interest rates until the new law goes into effect is gathering some support.  Ohio’s Sherrod Brown (who has some of the craziest hair in the Senate, by the way), loves the idea:

“Ohioans have had enough of the abusive and predatory practices used by credit-card companies,” Brown said in a statement. “Credit-card companies are doing all they can to raise interest rates and squeeze consumers in the final months before they have to play by a new set of rules. This bill will prevent these last-ditch efforts and ensure consumers receive the protection they deserve.”

There’s companion legislation afoot in the House, offered by Colorado Rep. Betsy Markey.  She and Brown are clearly on the same page:

“I’ve heard disturbing stories from Coloradans across my district that their credit card companies are suddenly and unfairly hiking their interest rates before the Credit CARD Act takes effect,” said Markey, D-Colorado, in a news release Wednesday. “These are exactly the kinds of abuses this law will prohibit, but before the ink was dry on the bill, credit card companies were looking for ways to get around the critical protections that Colorado families demanded. I totally opposed bailing out these Wall Street banks, but American taxpayers were still forced to come to the rescue, only to have their credit card companies turn around and stick it to them. It’s absolutely wrong and I’m fighting it.”

This approach stops short of complete early implementation, which does take some of the wind out of the sails of the “we can’t move that fast” argument proffered by the banks.  While Ben Bernake sounds reasonable when he says, ”Card issuers must be afforded sufficient time for implementation to allow for an orderly transition and to avoid unintended consequences, compliance difficulties and potential liabilities,” it’s hard to imagine massive logistical problems associated with a rate freeze.

This measure may end up just like the earlier push to implement CARD early.  We’re only a few months from February and Congress is embroiled in a headline-grabbing fight over healthcare and an ongoing controversy about military activity in Afghanistan.  Regardless of how you feel about a rate freeze, it’s hard to imagine that it would unseat issues like these for attention with the CARD Act right around the corner.

My bet?  It doesn’t happen.  It will be February before we see any regulatory change, as planned.  It looks like I was right about full early implementation, which seems to be a dead issue at this point, and I can’t imagine a different fate for this new bridge effort.