Democratic 2020 contender Sen. Bernie Sanders will introduce a bill capping credit card loan rates at 15%, a challenge to front-runner Joe Biden, who is well known for his close relationships with credit card companies incorporated in his home state of Delaware.
The Loan Shark Prevention Act is two pages long but includes regulations that stop hidden fees on interest and penalizes companies that violate the new regulations. The Vermont senator announced the bill in partnership with New York Democratic Rep. Alexandria Ocasio-Cortez.
“Today’s loan sharks wear expensive suits and work on Wall Street, where they make hundreds of millions of dollars in total compensation by charging sky-high fees and usurious interest rates,” Sanders and Ocasio-Cortez said in a joint statement.
Biden, the former vice president and senator, earned the nickname “senator from MBNA” when he led the Senate Judiciary Committee because of his close relationship with the credit card company before its acquisition by Bank of America in 2005. Employees of MBNA donated over $214,000 into his campaign from 1989 onward, his largest donor group at the time.
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MBNA eventually hired Joe Biden’s son, Hunter, in 2003. Hunter Biden became an executive vice president at the company before leaving, although the company continued paying him a $100,000 annual retainer as an adviser.
Biden has also been criticized for his role in supporting the passage of the 2005 Bankruptcy Abuse Reduction Act, which made it substantially harder for individuals to get bankruptcy protection from creditors.
During an April rally in Iowa, Warren attacked Biden over his history with companies such as MBNA and his role in the 2005 bill.
“I got in that fight because [families] just didn’t have anyone and Joe Biden was on the side of the credit card companies,” Warren said. “It’s all a matter of public record.”
Biden has cemented his status as front-runner since launching his White House run, with some polls of Democratic primary voters putting him as much as 32% above Sanders.
The last time the Senate voted to create caps on credit card interest rates was in 1991, when a Republican-led effort overwhelmingly passed the chamber before being quashed in the House. Then-Sen. Biden supported the bill but later admitted in a hearing that year that he had only supported the measure as part of an effort to “kill” a separate banking reform bill.
“I would respectfully suggest that a narrow bill is the proper bill, the correct way for us to go and the only practical way. Quite frankly, that’s the reason why I voted for the credit card cap because I hoped it would kill this bill,” Biden said at the time.
