The Maryland House of Delegates tonight approved a major bank deregulation measure that for the first time would allow credit card membership fees, a wide variety of other charges and variable interest rates on consumer loans.
The 72-to-63 vote, one more than the absolute majority of the House that was needed to pass the measure, came after five hours of sometimes emotional debate and followed a day of intense lobbying for the legislation by Gov. Harry Hughes, Lt. Gov. J. Joseph Curran and House Speaker Benjamin L. Cardin.
The bill, which the state Senate easily approved two weeks ago, must go back to the Senate for approval of several "consumer" amendments added by the House. Those amendments were worked out in advance with Senate leaders and Hughes, who has said he will sign the bill, and Senate approval is expected. The only possible threat appears to come from Sen. Clarence Mitchell (D-Baltimore), who said tonight that he will try to persuade some senators to filibuster the measure.
Proponents of deregulation portrayed the measure tonight as a key to economic development, needed to keep Maryland competitive with Delaware and Virginia, where deregulation has already been enacted. Four Maryland banks moved their credit card operations to Delaware last year.
"We are trying to keep ourselves in the real world and trying to protect the people of this state at the same time," said Del. Casper R. Taylor Jr. (D-Cumberland), one of the bill's floor leaders. "If we defeat this measure we are saying, 'Stop the world, I want to get off.' "
Bankers say that despite the numerous provisions for new fees, competition will keep charges and interest rates down. The bill leaves intact the 24 percent interest rate ceiling adopted by the legislature last year.
Opponents cast the measure, which was written in large part by the banking lobbyists, as a bank "bail-out" bill designed to help lenders at the expense of consumers. "This is one of the worst bills that could come out of the House," said Del. Elijah Cummings (D-Baltimore), "If we allow the banking industry to control this state we are in trouble."
Said Del. Gary Alexander (D-Prince George's): "I do not believe in the domino theory. I do not believe if Delaware and Virginia and some midwestern states enact onerous legislation we have to knuckle under and do the same thing."
The bankers' chief lobbyist, William K. Weaver, said tonight, "The bill should more than meet the needs of Maryland banks."
Labeled the most significant piece of legislation to come up during this General Assembly, the deregulation measure would allow banks and retail establishments, such as department stores, to charge credit membership fees for the first time. Banks also would be able to charge a fee for each credit card transaction and a monthly billing charge.
Any bank or retailer that did not want to charge the fees could instead begin charging interest from the day a credit card purchase is made. Under current law, consumers get 25 interest-free days on any credit card purchase.
The measure also would allow lenders to pass on to consumers attorneys' fees, appraisal fees and travel expenses that the institutions are now forced to absorb.
The bill also would ease current restrictions on banks in cases of repossession. Consumers would have only one opportunity to redeem a repossessed article.
In a concession made tonight to gain the votes of hesitant legislators, House leaders agreed to back a last-minute amendment that would restrict finders' fees and "points" charged borrowers to 2 percent of the original loan. Initially the bill allowed unliminted "points," loan fees and finders' fees.
That was, however, only one of two amendments that the House, under constant lobbying by its leaders, agreed to pass. Earlier it vetoed 21 other amendments offered as consumer protections, including one that would have restricted the use of credit card membership fees.
The amendment failed by a vote of 60 to 74 despite a plea from its sponsor, Del. Joseph Vallario, that "this is a chance to put some protection in the law and help the people back home."
It was this early vote that clearly demonstrated the effectiveness of the high-level lobbying by Hughes, his staff, Cardin and bank lobbyists. Just 24 hours before, House leaders were jittery about chances for passage.
The margin of victory came in part from members of the legislature's black caucus, some of whom had said earlier they would vote against the measure. Cardin, meeting privately today with caucus members, assured the legislators that if the banks abused the deregulation measure and used it to exploit consumers, he and his leadership would push next year to change the law.
He also promised and secured the addition of a special consumer complaint hot line as an amendment to the bill.
The only speech that seemed to unify the chamber tonight came from Del. Raymond Dypski (D-Baltimore), who declared: "This sounds like blackmail. I have only one thing to say to the banking industry: shame." At that the delegates, who had heard the identical speech in past years, rose to their feet applauding and shouting "shame, shame, shame," until Speaker Cardin gaveled them to order.