White House Presses For Senate Passage Of Credit Card Bill
Thursday, May 14, 2009
The Senate and White House worked feverishly yesterday to ensure passage of a bill that would prohibit many unpopular credit card industry practices, including arbitrary interest rate increases.
Senators debated at least 21 amendments to a bill authored by Banking Committee Chairman Christopher J. Dodd (D-Conn.). One amendment that would have capped interest rates at 15 percent was killed late in the day.
Lobbyists and congressional aides said a vote could come as early as today, but acknowledged that the introduction of so many amendments was slowing down the process.
Nonetheless, President Obama continued to push for a bill to reach his desk for signing by Memorial Day, ordering his top economic aides yesterday to make an aggressive, 24-hour push for passage of a bill. White House advisers Austan Goolsbee, Jared Bernstein and Melody Barnes gave multiple radio interviews and called financial editors and columnists at newspapers around the country to make their case.
The president was also planning to focus on credit reform at a town hall meeting in Albuquerque this morning. Aides said he will be introduced by a local resident struggling with credit card debt, and that the audience will include several dozen others in similar situations who wrote letters to him.
The movement to reform the industry has gained momentum in recent weeks as card issuers raised customers' interest rates to make up for lost revenue. Americans complained that the very banks that were penalizing them, sometimes even when they had made their payments on time, were receiving federal funds to bail them out of their own troubles. The White House and Congress took notice. "It's been a long time coming," Dodd told reporters this week.
Analysts and lawmakers said they expect the Senate bill to pass, especially because Dodd had reached a compromise over the weekend with Sen. Richard C. Shelby (Ala.), the senior Republican on the banking committee.
Industry representatives said yesterday that they, too, expect new legislation, and that it could cause them to lose more revenue, forcing them to raise rates or withhold credit.
"I think we recognize that there will be a change in the way consumers and card companies will interact," said Kenneth J. Clayton, senior vice president of the American Bankers Association. "We do worry that the quickness with which they're making these decisions may lead to adoption of provisions that actually limit the ability for consumers and small businesses to get loans, and that can have a broader impact on the economy."
The Senate bill would prohibit interest rate increases unless a borrower's payment was past due 60 days or more. But card companies would have to restore the original rate if the customer paid on time for the next six months.
The House on April 30 passed its own version of a credit card reform bill that would prohibit retroactive interest rate increases, except under certain circumstances such as the borrower paying 30 days late. That bill largely mirrors regulations approved by the Federal Reserve in December that would also ban many practices but that would not go as far as the Dodd bill.
The Federal Reserve's new rules do not go into effect until July 2010. Both the House and Senate bills seek to accelerate that time line by a few months.
If the Senate bill is passed, lawmakers will have to turn to reconciling differences with the House bill, which could also prolong the process. Consumer advocates, however, said they were not worried that the efforts would stall.
"There is pent-up demand to move a consumer protection bill through Congress," said Travis B. Plunkett, legislative director of the Consumer Federation of America.