When Congress passed credit card reform in May 2009, it didn't implement the new rules until February 2010. Most credit card companies took advantage of that lag time to jack up interest rates.

Since then complaints have poured into ConsumerAffairs.com from consumers who said they thought they were doing everything right, only to be blindsided by their credit card company.

"I always paid on time and paid more then the minimum payment," Dennis, of Caldwell, Idaho, told ConsumerAffairs.com. And to my surprise, since I had not charged anything in over a year, they closed my account and boosted my interest rate to 29.99 percent, which caused my payments to go up."

Connecticut Attorney General Richard Blumenthal thinks rate hikes like these should be rolled back. In a letter to Federal Reserve Chairman Ben Bernanke, Blumenthal said the Fed's draft credit card rules are "woefully inadequate" and said he would like to see changes to compel rollback of recent massive interest rate increases on creditworthy consumers.

Blumenthal said card issuers should reverse all arbitrary rate increases since January 1, 2009, for creditworthy consumers.

"Once again, the Federal Reserve Board has chosen to protect the interests of Wall Street bankers at the expense of Main Street consumers -- putting concerns for bank 'safety and soundness' ahead of consumer protection," Blumenthal wrote. "The board's apparent favoritism of banks mocks the clear Congressional intent evidenced in the CARD Act to protect consumers from the abuses of credit card issuers and underscores the need for a strong, independent Consumer Financial Protection Agency that puts consumers first."

Blumenthal says the Fed should have opposed interest rate increases that credit card issuers imposed on consumers -- even some of their best customers who fully honored their credit card agreements -- before the CARD Act's effective date.

'Violates CARD Act's fundamental purpose'

"Indeed, the proposed regulations do not actually require interest rate reductions regardless of how unjustified the increase," Blumenthal wrote. "The board's failure to require interest rate reductions in these circumstances violates the CARD Act's fundamental purpose of protecting consumers from bank practices that take advantage of and gouge consumers."

Blumenthal says card issuers used the interim between passage of the CARD act and its implementation to jack up rates to as high as 30 percent on consumers, many of whom never missed a payment. Blumenthal said he has written the Fed three times since December noting that the CARD Act compels issuers to roll back arbitrary increases during the interim and urging the Fed to write rules compelling decreases.

Blumenthal said the Fed's draft rules fail to compel rollbacks by letting issuers set their own standards for interest rate reviews required by the law.

"The board's complete lack of regulatory guidance leaves banks free to perform perfunctory reviews, manipulate amorphous factors to justify rate increases, switch to different factors during the review from those used to increase rates, and otherwise deny appropriate rate reductions -- even where such reviews show a clear decline in consumer credit risk," Blumenthal said in his letter. "Under the board's proposed rules, banks are literally free to look at any factors they choose and to write their own 'policies and procedures' for doing the required reviews without any guidance from the board to ensure that the methodologies used are reasonable.

Blumenthal also took issue with the Fed for creating what he called "a gaping loophole" by exempting penalty interest rate charges from the law's requirement that all penalty fees and charges be "reasonable and proportional."

The attorney general said the Fed should establish "safe harbors" -- maximum amounts -- for penalty fees.

"In setting these 'safe harbor' limits, the board should look to the far lower amounts that community banks and credit unions currently impose -- compared to those of large banks -- as strong indicators of the maximum amounts necessary to deter cardholder misconduct and recover bank costs incurred as a result of such misconduct," he said.