I assume Sen. Chris Dodd knows how the free enterprise system works and that, with his new bill that would require credit card lenders to immediately freeze rates on existing balances, he's simply playing to the pitchforks in my home State of Connecticut, where he's having to scramble from behind in his 2010 reelection bid.   

What other explanation can there be? Back in May, recall, Congress passed a law that will restrict the ability of card lenders to raise rates and impose fees on their customers. The card industry opposed the bill, but made no secret of the fact it can adapt to the bill's new rules. Since then, understandably, lenders have selectively increased rates and imposed fees, in anticipation of their soon-to-be-restricted ability to dynamically price when the new law goes into effect in February. The people who voted for the law should have expected this to happen. The card lenders' lobbyists must have promised them it would. This isn't an instance of card companies putting an extra squeeze on their customers. They're simply reacting to a changed regulatory environment.

And now Chris Dodd wants to force card lenders to freeze rates immediately? If Dodd were to get his wish, the first result would be to severely restrict the flow of consumer credit, which is precisely what the economy does not need at this point in the cycle. 

Here's a basic truth in banking: The more restrictions government places on lenders' ability to extend credit, the more expensive credit will become. We've already seen how lenders have responded to the bill Congress passed in May: rates have risen and fees have proliferated. Now Dodd wants to impose even further restrictions. Guess what figures to happen next? Follow this process to its logical conclusion, and credit won't simply become even more expensive, it will dry up altogether. As I say, this is just what the economy does not need.

If government changes the rules under which banks can extend credit, lawmakers shouldn't be surprised that banks will in turn change the rules under which they extend credit. Any bank that's interested in staying in business has no choice but to do that. 

Chris Dodd's bill is idiotic and dangerous. If Congress is even capable of acting even remotely rationally, it will never see the light of day.