Our blessings in the Senate, Max Baucus and Jon Tester, are at it again, this time voting against establishing a national interest rate ceiling for credit cards that would protect consumers from usury. Earlier this spring they voted against giving bankruptcy courts the authority to modify mortgage contracts to help consumers stay in their homes.
Offered by Sen. Bernie Sanders (I-Vermont), the anti-usury amendment to HR-627, the Credit Cardholders’ Bill of Rights Act of 2009, was killed by a vote of 33 for, 60 against (vote details). Here’s the language that Baucus and Tester oppose:
SA 1062. Mr. SANDERS (for himself, Mr. HARKIN, Mr. LEAHY, Mr. WHITEHOUSE, Mr. DURBIN, and Mr. LEVIN) submitted an amendment intended to be proposed to amendment SA 1058 proposed by Mr. DODD (for himself and Mr. SHELBY) to the bill H.R. 627, to amend the Truth in Lending Act to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes; as follows:
SEC. __. NATIONAL CONSUMER CREDIT USURY RATE.
(a) In General.—Section 107 of the Truth in Lending Act (15 U.S.C. 1606) is amended by adding at the end the following new subsection:
(f) National Consumer Credit Usury Rate.—
(1) LIMITATION ESTABLISHED.—Notwithstanding subsection (a) or any other provision of law, but except as provided in paragraph (2), the annual percentage rate applicable to an extension of credit obtained by use of a credit card may not exceed 15 percent on unpaid balances, inclusive of all finance charges. Any fees that are not considered finance charges under section 106(a) may not be used to evade the limitations of this paragraph, and the total sum of such fees may not exceed the total amount of finance charges assessed.
According to the New York Times:
…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.” Senate Rejects Limit on Credit-Card Interest Rates.