May 20, 2010
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News: Mark One Up For The CC Companies
You can mark one up for the credit card companies as the Senate voted down a crucial amendment to the financial reform bill. The amendment would have allowed individual states to set credit card interest rate caps on any bank operating within the state whether it was based in that state or not. The law, which was enacted over two decades ago, allows lenders to set interest rates across the nation based on their set rate in its home based state. States like Delaware and South Dakota removed credit card interest rate caps as bait luring lenders to their states firing off a wave of abusive practices which continued on into the 21st century.
Had the amendment passed, it would have allowed each of the individual states to set credit card interest rate caps on out of state lenders. The proposal was introduced by Senator Sheldon Whitehouse (D-RI) was feared by Delaware representatives seeing it as a threat to the economic and employment foundation of the state. In his argument supporting the amendment, Whitehouse said it was the "practical" thing to do to protect Americans. After the Senate voted in favor of the credit card companies and against the amendment by a 60to 35 vote, Whitehouse vowed to continue fighting for the rights of Americans living within states with weak consumer protection.
Opponents believe that such an amendment would have made it more difficult for banks to adequately price credit card products for risk. Furthermore, they argue the effects of such a rule would place additional burden on states like Delaware and South Dakota because of possible consequences to the lose of tax revenues and jobs. Delaware alone would lose over $80 million in tax revenue not to mention nearly 40,000 jobs. Proponents say it’s time big banks be held accountable for their predatory practices and that lawmakers vote to protect Americans.