The Maryland Senate today approved legislation raising permissible interest rates on credit card borrowing and small bank loans by up to 50 percent as opponents ran out of delaying tactics in their attempt to block one of the most thoroughly lobbied bills of the legislative sessions.
The measure, which passed by a 31-to-13 vote, raises the interest rate ceiling for small loans from 12 percent to 18 percent, and allows credit card borrowers to be charged 18 percent interest on the first $700 of their outstanding balance. At present, banks may charge 18 percent interest only on the first $500 of a credit card holder's debt.
While the bill's opponents claimed the new rates were unnecessarily high and unfair to potential borrowers, banking lobbyist William Weaver and the bill's sponsor, State Sen. Jerome F. Connell Sr., argued that the current interest rate ceilings were artifically low and discouraged banks from making loans.
The lobbying on the specific measure, included numerous conferences between Weaver and individual senators, including one in which the lobbyist brought the legislator's home town banker in with him while he made his plea.
The banking industry's courtship of state lawmakers traditionally has encompassed far more than reasoned argument. Last May, five powerful legislators traveled free of charge to the annual bankers' convention in Fort Lauderdale, Fla., where they served as panelists or speakers.
Of the five, Connell eventually sponsored the interest rate bill at Weaver's request. Another, State Sen. Harry J. McGuirk, chaired the committee that eventually sent to the Senate floor the modified version of the measure that passed today.
The two legislators consistently have denied there was anything improper about their decision to attend the conference. "I have more background in that industry than anyone else here. That's why I was there [at the conference]," Connell said yesterday.
The measure now goes to the House of Delegates for approval. One of its backers said today that, while he expects eventual House approval, he also believes the interest rate ceiling for consumer loans will be lowered somewhat by House amendments.