Credit Card Bill - What Got Left Out
Former Fla. Gov. Jeb
Written by CBS News investigative producer Laura Strickler
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
Copyright 2010 CBS. All rights reserved. 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
When they RAISED the minimum payment percentage (so that we wouldn't take 100 years to pay off a balance), all it did was make those of us who could only PAY the MINIMUM have a HIGHER amount to pay each month!
I don't have high credit card balances because I have spent wildly on caviar and truffles.
I have them because I have spent wildly on GASOLINE, GROCERIES and monthly BILLS, such as electricity, phone, etc.!!
If you REALLY want to help us, Senators, Reps, etc.--then BAIL US OUT!! Give us HARD-WORKING AMERICAN people some $$$$$$$$!!
I know--it's not LEGAL to give $$ to everyday American workers! HAHAHAHAHAHA!
Posted by mrcrosbyll at 7:25 PM : May 19, 2009
*****
2 fallacies in this argument ... number 1 you don't build wealth with an asset that depreciates to zero (if you've ever tried to sell/trade a ten-year old car you won't dispute this point - take your $500 and run!); 2 - If you resist the temptation to upcharge - e.g. lease a car at the same price point you could have tolerated buying a car (e.g. don't lease the Mercedes when you could only buy the Honda) - then you could take the cash differential between the lower lease payment and purchase and save it to gain from the interest. Of course you have to be smarter than a fifth grader, not fall victim to your own excessive desires, and not be ready to blame your stupidity on someone elses greed. Three traits our society seems to be losing in this entitlement crazy, no personal responsibility, blame it on everyone else environment we find ourselves in.
So, 85% of luxury care drivers really can't afford what they're driving.
#1 choice among millionaires? - Ford.
Posted by formrusmcsgt
Leasing makes it easier to look wealthy. Small downpayment, reasonable monthly payment, and no equity at the end of the lease period. That way, you can fool your neighbors and friends into believing that you can afford an expensive car.
Thanks, all.
As always, a pleasure.
Posted by mrcrosbyll at 6:00 PM : May 19, 2009
As I am proud to say, I can afford custom, but drive stock.....
Posted by mrcrosbyll at 5:41 PM : May 19, 2009
I personally view this "need to impress" as a sign of insecurity.
If you need to impress them with how much debt you've taken on, you don't have much going for you in the first place....