The Senate overwhelmingly rejected an effort to impose a 15 percent cap on interest rates for banks and credit card companies yesterday. The banking and credit card lobby had made this vote a priority with literally hundreds of lobbyists working members. It was an interesting alliance of Republican and Deomocratic members on a volatile issue.
The statement only seems to confirm a recent statement by Sen. Dick Durban: “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
The legislation was proposedl by Senator Bernard Sanders, who could only get 33 votes. He lost a large number of Democrats listed below:
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26 thoughts on “Senate Votes Down Limits on Credit Card Interest Rate”
I don’t think the reform being considered by Congress goes far enough because I don’t think they (and we) know the extent to which bankers will go to get their way. On suspicious practices at amcore bank in IL, I recommend the following:
“The problem we have now is greedy banks, who have fraudulently operated their credit card business to make obscene profit. They are legitimized “loan sharks.” The free market you think will work is a total illusion. You give these bankers a free market and they will collude further to maximize profit”
as another installment of our on going debate about the merits/demerits of free market capitalism I offer up the following thoughts.
What about taxes? I freely acknowledge the necessity of some taxes for roads, fire, police and defense of our country. But we don’t need 15%-33% of our income going to the federal government-God only needs 10%. And those numbers do not include state and local taxes and social security payments from you and your employer. An average family making 75,000 per year pays on average 40% of their income to all of these taxes. No wonder your friends cant pay off a $20,000 credit card.
Your premise about collusion of bankers is false. There are couple of minor little concepts called competition and rational self interest. Typically I have found that collusion takes place when the colluders can only survive by collusion. They are afraid of competition. Collusion makes no sense for an individual or corporation that is profitable what do they have to gain?
There is too much dynamism in a free market to make collusion a viable consideration for a business model. There is always some one in the wings to take advantage of inflated prices of other companies. If I was a credit card company I would hope my competitors were charging ridiculous rates so I could lower mine and get more customers or somehow improve my service or price or both. I know what you are thinking at this point but ask yourself why are there only a few credit card companies? Because of government regulations, there is too much of a burden to entry. Government is creating the collusion if there is any through strict regulation of financial services companies which makes the entry to other companies prohibitive and encourages usury of existing companies because they have nothing to fear.
The new rule violated the Ferengi Rules of Acquisition.
No, 30% really isn’t that bad. If, for example, somebody owes $20,000 to a credit card, 30% interest would come to $6000 per year or $500 per month. Tell me, how many individuals who have to borrow $20,000 in the first place can afford to pay $500 each month in interest?? And that is just interest without paying down any portion of the principal!
Apparently, these days the banks are paying 3% interest to borrow from the Fed. So all they’re doing is making a mere 900% profit. And you want to deprive them of this miniscule amount??
How would they be able to afford their CEOs’s multi million dollar Christmas bonuses, yachts, and trips to exotic resorts???
You really think that putting food on the table for your children is more important than ensuing that the banks can afford those luxuries?? How selfish of you.
I have contributed to several of the senators on this list in the past. Never again. As far as I’m concerned, being in the pocket of the major banks belongs in the same category as supporting al qaeda. I can’t say that I’m surprised by a lot of the names on this list (read Specter, Lieberman, Ben Nelson, Jeanne Shaheen, Mary Landrieu, Pryor of Arkansas). But Debbie Stabenow?? And Maria Cantwell? Devastating.
I am glad that you mentioned the credit card that was charging 36%. I jumped out of my seat when I read Matthew’s posting saying 29% is not bad. I guess it isn’t bad if you are not paying that high of a rate. All of the items that you say they should not be allowed may suffer the same fate as the 15% limitation. The banking lobby has the Congress by the throat and they are not about to let go. Even 15% is too high for a short term loan, especially when the prime rate is so low now.
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