Can Meaningful Credit Card Legislation Pass Congress?
There really isn't a better populist issue for the President to take on than the issue of usurious credit card fees and rates. The industry has essentially gotten away with murder for decades, and given the populist fury whipped up on both sides of the aisle even the corporate-loving Republicans will have a hard time voting against this one.
WASHINGTON — President Obama threw his support on Thursday behind legislation that would keep banks from imposing higher fees and interest rates on credit card users, and said terms must be “written in plain language and be in plain sight.”
“The days of any-time, any-reason rate hikes and late-fee traps have to end,” the president said at the White House after meeting with top executives from the nation’s largest credit card companies, a session Mr. Obama called “constructive.”
“No more fine print, no more confusing terms and conditions,” the president said, following up on campaign pledges to try to curtail high fees and rates and chop away at the thickets of fine print in credit card statements.
The meeting came as the House was preparing to adopt new restrictions on credit cards. Lawmakers said on Thursday that they had agreed to make some amendments to the legislation that were being sought by senior White House officials. One provision would require the credit card companies to apply consumer payments first to any debt that has the highest interest rate.
This is a move they always pull. If you get behind on one payment, whatever you pay in the future only pays off the lowest-rate debt.
That would be additional to the rules that the Federal Reserve already has adopted regarding the industry. The bill codifying those rules into law, along with several other provisions, has already passed the House.
On Wednesday the House Financial Services committee overwhelmingly approved a bill that would reduce many fees and limit the ability of the credit card companies to charge penalties. The bill, sponsored by Representative Barney Frank, Democrat of Massachusetts, and Representative Carolyn B. Maloney, Democrat of New York, was adopted 48 to 19.
The bill put into law most of the credit card restrictions adopted last year by the Federal Reserve, and also imposed some new rules on the industry. It would, for instance, prohibit the companies from marketing credit cards to minors. It also would require the companies to provide more information to regulators and permit consumers to order companies to set their credit limits at amounts lower than the card company was willing to offer.
Congressional aides said the measure could reach the House floor as early as next week, and they predicted swift passage.
A similar bill was adopted by the Senate banking committee three weeks ago, but its narrow passage and opposition from all of the committee’s Republican members indicated that it faced an uphill battle.
It's always the Senate, isn't it? Not to mention the fact that the Representatives from South Dakota and Delaware, the "offshore tax havens" of the credit card industry, aren't likely to go along with much of anything. And in the Senate they hold far more power relative to their population than they should. Unicameral legislature FTW! We'll see the limits of what the President can pull off here.
Incidentally, Carolyn Maloney, who is a great progressive fighter, is seriously considering a primary challenge to Sen. Kirsten Gillibrand in New York. If she does it, she'll have my support.