Senate Rejects 15% Limit on Credit-Card Interest Rates

By Carl Hulse

May 15, 2009 "New York Times" -- D
espite complaints that banks and credit card companies are gouging customers by charging outrageous interest rates, the Senate on Wednesday easily turned back an effort to cap interest rates at 15 percent.

The effort by Senator Bernie Sanders, the Vermont independent, drew only 33 votes and needed 60, with a bipartisan group of 60 senators opposing it as the Senate pushed its credit card overhaul toward the finish line. Some Democrats and consumer groups have said that an interest cap is needed to put real teeth into an otherwise solid bill.

Other backers of the measure calculated that an interest rate ceiling would doom the popular legislation. The banking industry, which had some heavy-weight representatives monitoring the vote off of the Senate floor, warned that an interest rate limit could cause a sour reaction in the financial markets.

But Mr. Sanders said the card companies and banks were engaged in conduct that could get others hauled into court. He said one-third of all credit card holders are paying interest above 20 percent and as high as 41 percent.

“When banks are charging 30 percent interest rates, they are not making credit available,” said Mr. Sanders, who noted credit unions are limited to 15 percent. “They are engaged in loan-sharking.”

After the effort failed, Senator Christopher J. Dodd of Connecticut, the Democratic chairman of the banking committee, proposed that the Federal Reserve be asked to provide an analysis of how Congress could rein in interest rates.

Senators said they hoped to finish up the credit card bill as early as Thursday, coinciding with a town hall meeting by President Obama on credit card issues in New Mexico.


Who Voted Against Capping Credit Card Interest Rates?

By Carl Hulse

It was just a procedural vote in the debate over new credit card rules, but evidently the overwhelming Senate vote against capping the rate of interest that credit card companies are allowed to charge their customers struck a chord with the public.

Multiple readers have written in the wake of Wednesday afternoon’s vote asking for the identity of the 60 senators who opposed the 15 percent cap proposed by Senator Bernie Sanders, independent of Vermont.

The vote was on a motion to waive budget rules to allow the proposal by Mr. Sanders to be added to the bill and required 60 votes to pass. Mr. Sanders and others have argued that the credit card companies are engaged in what amounts to usury by charging as much as 40 percent interest.

All of the supporters were Democrats except for Senator Charles E. Grassley, Republican of Iowa. - Read the Senate’s roll call vote on the motion.

 

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