The White House has anointed a Democratic bill aimed regulating the credit card industry. And while the bill is popular in the House, even the blessing of President Barack Obama may not be enough to move it through the Senate.
The House Financial Services Committee is expected on Wednesday to approve a bill sponsored by Rep. Carolyn B. Maloney, D-N.Y., that aims to end — “deceptive and abusive” practices practiced by the credit card industry, such as arbitrary interest rate increases and enticing teenagers with easy credit.
The bill passed the House last year with the support of nearly every Democrat and 84 Republicans. A similar outcome is expected in the coming weeks when Speaker Nancy Pelosi, D-Calif., brings the bill to the floor.
Enthusiasm for the legislation is much more subdued in the Senate, where the bill died last year.
Banking, Housing and Urban Affairs Committee Chairman Christopher J. Dodd, D-Conn., has introduced a similar credit card reform bill that includes reforms such as requiring a credit card company to give 45 days notice before raising a customer’s interest rate.
The bill last month barely passed Dodd’s committee, with every Republican voting against it along with one Democrat, Tim Johnson of South Dakota, a credit card company hub.
Senate Majority Leader Harry Reid, D-Nev., has indicated no plans to take up the bill. And with big battles looming over health care and energy reform, credit cards may have to wait.
Part of the reason for the lack of enthusiasm is that the Federal Reserve will put almost identical rules in place in July 2010.
On Sunday’s “Meet the Press” White House National Economic Council Director Lawrence H. Summers said Obama wants credit card reform as part of a larger push for “a very strong program of regulation.”
Summers said credit card reform was needed to put an end to practices by the credit card industry that leave consumers “deceived into paying extraordinarily high rates they wouldn’t have paid if they knew what they were getting themselves into.”
Maloney, the House bill sponsor, told The Examiner the bill is aimed at “stopping some of the most abusive practices,” like increasing credit card interest rates if a cardholder is late paying an unrelated account, and lacing contracts with indecipherable jargon.
But many Republicans and some Democrats fear such a bill would further restrict the troubled credit market that is much to blame for the recent economic downturn.
“The proposal would reduce the availability of credit for people who need it, while making credit more expensive for everyone, which is not what financial markets need, especially in the current economy,” said Brad Dayspring, spokesman for House Minority Whip Eric Cantor, R-Va.
Peter Wallison, a financial policy expert at the American Enterprise Institute, a Washington free-market think tank, said consumers are indeed confused by their credit card agreements but that regulating the industry “could interfere with things in ways you can’t see in advance.”
