The credit card bill approved by the Senate today is expected to land on the President's desk before Memorial Day. When he signs the bill, President Obama and the chairman of the Senate Banking Committee, Chris Dodd, D-Conn., will hail the bill's passage as a victory for consumers. But they will likely neglect to mention the items the credit card industry successfully kept out of the bill.
Mr. Obama and Dodd are also unlikely to note how much money their respective campaigns received in 2008 from the finance/credit card industry. For Mr. Obama, it was $410,116 and for Dodd it was $209,100, according to The Center for Responsive Politics.
Credit card companies killed two proposals to impose caps of 15 percent and 36 percent annual percentage rate (APR) on credit cards and other loans. An industry lobbyist told CBS News that that's because in many cases credit card issuers are already charging more than 36 percent -- if you add up the charges for things like late payments, insufficient funds, annual fees and cash advances. The industry says they could not survive if they were limited to 36 percent APR.
In a letter the American Financial Services Association urged all U.S. senators to oppose all rate caps and so far they have been successful.
Sen. Charles Grassley, R-Iowa, was the only Republican senator to vote last week for the rate cap amendment that would have set the cap at 15 percent. Even though the amendment failed, it was barely 9:00 a.m. the next morning before his staff got a call from a credit card lobbyist wanting to know why Grassley voted for the cap. He told CBS News that he voted along with 32 Democrats because he is against "usury," the practice of lending of money at exorbitant interest rates.
So far the credit card industry has also succeeded in delaying the implementation of any regulatory changes for nine months in the Senate version or a year in the House version. Earlier versions of the bill had only a 90-day delay.
Bill Himpler, a lobbyist for the American Financial Services Association says the industry needs the time to implement the changes. "This is not like going to Comp USA and pulling software off the shelf and flipping a switch - all of our member companies computer systems need to be configured," Himpler told CBS News
"It's incredible that their software only works in one direction and can't be reversed," said Kathleen Day, spokesman for the Center for Responsible Lending, "I say that facetiously, because of course, that's ridiculous," she said.
Critics like Day say this delay can mean more money for the credit card industry. Other critics note that an extra nine months gives the industry time to raise and lock in higher interest rates. When asked for a response, Himpler replied: "To our critics? You know, I'm not going to say anything."
Sen. Dick Durbin, D-Ill., recently told a local Chicago radio station that in his opinion the banking industry "frankly owns the place."
Sen. Bernie Sanders, D-Vt., offered some evidence to back that up in a recent floor speech. He cited a recent report from the Consumer Education Foundation that said the financial services lobby spent $5.1 billion on campaign contributions and lobbying in past decade. He also notes that they have five lobbyists for every member of Congress.
By Laura Strickler