The power of the financial lobby, even in the wake of an epic economic collapse fueled largely by its own excesses, never ceases to amaze. The current front, of course, is a Senate proposal to curb credit card abuses. Mike Lillis of the Washington Independent reports:
The proposal, sponsored by Senate Banking Committee Chairman Chris Dodd (D-Conn.), would prohibit rate hikes on existing balances, give cardholders longer notice to pay their bills, and prevent card companies from charging fees when customers pay their bills on time.
….A similar credit card reform proposal, sponsored by Rep. Carolyn Maloney (D-N.Y.), passed the House easily last week, but the Senate bill goes even further to protect card users from unexplained fees and surprise rate hikes. The question now on the minds of many anxious consumer and lending advocates is this: How strong can Senate Democrats keep those consumer protections and still have the bill pass the upper chamber?
….For consumers, there’s a great deal hinging on what credit card reform provisions the Senate can pass. The Maloney bill in the House, for example, allows card companies to hike rates on existing balances when the borrower is more than 30 days late on a payment. The Dodd bill, by contrast, prevents retroactive rate increases in all cases. An analysis conducted by The National Consumer Law Center found that roughly 10 million Americans would still be vulnerable to those retroactive hikes if Maloney’s version of the provision were adopted instead of Dodd’s.
Really, this is beyond belief. Retroactive rate hikes on existing balances are indefensible under any circumstances. A third grader on a playground would understand why. Despite this, every single effort to ban the practice has failed. Over and over and over, they’ve failed. And now, even with the finance industry on its knees, hated and despised for its lavish compensation packages financed by trillions in taxpayer bailout cash, there’s still some question about whether Congress can pass this no-brainer of a bill. Instead, we might end up merely banning retroactive rate hikes for 30 days.
This practice (which goes by the charming name of “universal default”) should have been banned the first time it ever reared its ugly head. The fact that there’s even a chance of it continuing to survive in any form at all after the events of the past couple of years should dispel any questions about the death grip the finance industry has on American politics. It’s the smoking gun that bankers own the country.