On April 19 I wrote an article critical of an amendment proposed by Senate Durbin to the Senates’s FinReg bill which would have capped the interest rate ceiling on consumer loans at 36%. Senator Durbin said that he tried to pick an interest rate high enough that even the biggest banks could not object. Guess what? They objected.
Senator Durbin did not get his way with his 36% interest rate cap. What the American public got instead was a kick below the consumer belt by Senate Republicans. According to Reuters, the Senate gave a 35 -60 thumbs-down vote on the Senator Sheldon Winehouse amendment, that could have put the brakes on predatory consumer loan lending. What the Senate did for consumers was to let the large national banks, which do most of the credit card business in the United States, continue to be allowed to charge basically any rate anywhere that they wanted. Their rate limitations, to the extent that there will be any, will largely be determined by the laws of corporate friendly Delaware and South Dakota which, essentially, have no interest rate limitations for consumer loans. States will not be allowed to set their own interest rate caps within their states on lending done by national banks.
I haven’t looked at the analysis of the Senate vote, but I think I can safely stick my neck out and say that the 60 votes were overwhelmingly Republican ones. If they want to vote their conscience for special big banking interests, then so be it. But voting against an issue that gives the states more regulatory rights doesn’t quite jibe with the Republican Party line – that is, unless it is convenient to do so. The Winehouse vote just confirms that the Republicans use state’s rights’ issues only when it is politically expedient (Bush-Gore comes quickly to mind). I guess that there isn’t a constitutionally based principle in their bodies when it goes against their Wall Street buddy-banks. It’s sickening.
Unless the House of Representatives does something drastic in the reconciliation process (don’t get your hopes up), the die is cast. Of course, that means that we can look forward to endless TV commercials; mail solicitations will start rolling again; and people will continue to get fleeced. But according to 60 Senators, that’s OK. In fact, not was it only OK, they pressed the button that will make it happen.
I wouldn’t count on increased disclosure on credit card statements to do much of anything to alter the consumer loan landscape. You don’t have to put in capital letters on the front of someone’s credit card statement that they will likely get in financial trouble. They already know it.