Union hits Citigroup over rate hikes

The Services Employees International Union (SEIU) is criticizing Citigroup over a report that said the bank is increasing rates on its credit cards.

SEIU Secretary-Treasurer Anna Burger said it would be "shameful" for Citigroup, which has taken a $45 billion bailout from the government, to raise rates as unemployment continues to rise.

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"It's shameful that Citigroup would raise interest rates on millions of Americans during a time when record unemployment and home foreclosures are forcing families to rely more and more on their credit cards just to get by," she said.

The Financial Times reported Wednesday that Citigroup was increasing rates on between 13 million and 15 million credit cards that it co-brands with Sears and other retailers.

Congress approved legislation earlier this year that would impose new rules on the rates companies can charge, but they do not go into effect until February 2010.

"This is what many of us feared about a law that didn't take effect right away," Sen. Charles Schumer (D-N.Y.) said in a statement released Wednesday. "Issuers are using the delay in the effective date to wring more dollars out of their customers. It is against the spirit of the law and it is just plain wrong."

He called on the Federal Reserve to immediately place limits on the hikes that credit card companies can impose on existing balances.

SEIU is lobbying for legislation that could make it easier for bank employees to be unionized. It also supports legislation that would strengthen shareholder rights, which could increase the power of union pension funds that are shareholders in various corporations.

Business groups, including big banks, oppose organized labor on both of these issues.