Banks ahead against credit card reform
TEXT OF STORY
Tess Vigeland: You’re forgiven if you’re confused over all the various versions of credit-card reform coming out of Capitol Hill.
The House has passed a measure prohibiting card companies from calculating interest based on two months’ worth of transactions. The Senate unveiled legislation today banning cards for kids under 21 without parental permission.
And today lawmakers compromised on retroactive interest-rate hikes. You can get your old rate back by paying bills on time for six months. President Obama is pushing to get a bill on his desk by Memorial weekend. But the banking industry is fighting back. And as Marketplace’s Steve Henn tells us, in many cases, the lobbying effort is working.
STEVE HENN: This year John Taylor thought his time had finally come. The consumer advocate wanted a series of reforms, like judges stopping foreclosures and resetting interest rates. He wanted a ban on high-interest pay day loans. And a tough law to end predatory mortgages.
The score on Capitol Hill:
JOHN TAYLOR: You know, it’s the bottom of the 9th, and it’s bankers 10, consumers zero. It’s like being in a street fight, and you and a few friends just went up against a 100 other people, and you are just picking yourself up off the ground.
And you’re just bloodied.
TAYLOR: This Congress has still not outlawed the predatory practices that got us into this mess to begin with.
Taylor says lawmakers have caved on pretty much all his issues, and banks are still fighting reforms that would make jacking interest rates on credit cards harder. So how did the banking lobby do it?
SCOTT TALBOTT: We knew we were going to be up against it. Yeah, we knew it was going to be a tough year. And so far, it has not been as tough as expected.
Scott Talbott is a lobbyist at the Financial Services Round Table. Talbott’s top priority this year was to kill a bill letting bankruptcy judges halt foreclosures and rewrite mortgages. But he was fighting a half dozen different battles.
TALBOTT: Cram-down, credit cards, exec comp, housing, bankruptcy. The whole bit. It’s been a hyper-drive, blitzkrieg, non-stop, no huddle kind of deal.
And on almost every issue he followed the same strategy. Bank lobbyists convinced lawmakers to tackle each reform separately and not as part of any must-pass bill like the stimulus package. And when consumer advocates pushed for new rules, bankers would argue that the rules would hurt credit and jack interest rates. But John Taylor at the National Community Reinvestment Coalition says bankers’ biggest advantage was financial.
TAYLOR: They just spent $42 million in the first quarter of this year on lobbying. I mean, we have the best Congress that money can buy.
Bank lobbyists talk regularly to virtually every member of Congress. And almost all of them got a piece of the nearly half a billion dollars that the industry spent on the last election. But Scott Talbott says the industry can’t just buy love.
TALBOTT: It’s not about dollars; it’s about information flow. It’s about what the right answer is for the economy. And that’s where you have to continue to keep focused. All other arguments are red herrings.
But a Democratic Senate leader seems to disagree. Dick Durbin told a Chicago radio station last week quote, “Banks are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
In Washington, I’m Steve Henn for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
