After a lengthy and at times heated debate, the House yesterday voted 408 to 1 to require credit card issuers to disclose interest rates, annual fees and grace periods in advance to card applicants.
The outcome was a defeat for Frank Annunzio (D-Ill.), who had waged a one-man crusade to set a federal ceiling on credit card interest rates. Annunzio's substitute amendment, which would have set a cap of 8 percentage points above the yield on one-year Treasury securities (15 percent at current rates), lost by a vote of 356 to 56.
Credit industry representatives hailed the results. "Congressional rejection today of credit-card price controls is a triumph for consumers," said Donald G. Ogilvie, executive vice president of the American Bankers Association. "The House fortunately rejected superficial and emotional arguments that an interest rate cap on credit cards would have been pro-consumer," said Joe Belew, president of the Consumer Bankers Association.
The nay on the disclosure issue was recorded by Philip Crane (R-Ill.)
Despite the lopsided votes, the outcome was uncertain during much of the four-hour session. Industry lobbyists had wanted to avoid a vote on the amendment because they feared legislators would be reluctant to vote against what was presented as an issue to help consumers.
After an unsuccessful fight in the rules committee to block the amendment, Republicans almost succeeded in blocking the measure on the floor on technical grounds. The Democrats prevailed 217 to 198 and debate proceeded.
Annunzio and his few supporters said the interest rate caps would provide protection for credit card holders, especially middle income customers. A vote for his amendment was in favor of lower interest rates, he argued.
Opponents on both sides of the aisle said rate caps would result in higher fees, shorter grace periods and less credit for marginal customers, and legislation containing caps might face a presidential veto. On the contrary, opponents argued, disclosure legislation would assist freedom of choice and therefore would help consumers.
During the debate Gus Savage (D-Ill.) made an emotional plea for caps to aid the ordinary worker who found himself in a hotel room and had to use a (high interest) credit card to order room service. Barney Frank (D-Mass.) replied that he was "particularly touched" by Savage's story but suggested the poor man could have gone to the coffee shop and paid cash.
The Senate has a similar disclosure bill pending. Its author, Sen. Christopher Dodd (D-Conn.), said yesterday he expected swift action in committee and a floor vote before the end of the current session.