Hillary Clinton, who receives large sums of money from banks and investment companies, has waffled on the issue. In the The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, Harvard law professor Elizabeth Warren recounts a 1998 meeting with Clinton, who was then First Lady. Clinton wanted to know more about credit cards and how they affected women and Warren, a leading critic of credit card company practices, gave her a short lecture over lunch, focusing on the drawbacks in an earlier version of the new bankruptcy legislation (which Bill Clinton and the White House staff were quietly supporting in hopes of wooing the banking industry). Warren writes that after their talk, Hillary promised to do what she could to stop the "awful bill." And, by the time the legislation passed Congress in 2000, Bill Clinton had changed his position and vetoed it. An aide later told Warren, "A couple of days after Mrs. Clinton met with you, we changed sides [on the bankruptcy bill] so fast that you could see skid marks in the hallways of the White House."
But a year later, Clinton, then a freshman senator, voted for virtually the same bill when it was refloated by Bush. "Campaigns cost money," Warren writes, "and that money wasn't coming from families in financial trouble. Senator Clinton received $140,000 in campaign contributions from banking industry executives in a single year, making her one of the top two recipients in the Senate."
Despite his 2001 yes vote on the bankruptcy legislation, John Edwards is now one of the only candidates now taking up the issue of consumer debtrelying, in large part, on Elizabeth Warren's analysis and ideas. In a speech on his campaign theme of "the two Americas" at Cooper Union in New York City last month, Edwards proposed "setting up a new consumer commission to be called the Family Savings and Credit Commission
[to] deal with all financial servicescredit cards, mortgages, car loans, check-cashers, payday loans, investment accounts, and more. It will ban the most abusive terms and make sure consumers understand the others." Edwards has also more directly pledged to "pass strong national laws protecting us against the worst abuses in credit markets." (On that front, of course, Congress would have to cooperate.)
Elizabeth Warren agrees that the credit card crisis needs to be addressed through legislation. "The current problem is that the Federal Reserve, the Office of the Controller of the Currency, and other financial regulatory institutions are not currently charged to protect consumer safety," she explains. "The primary responsibility of the regulatory agencies is to assure the profitability of the banks and other lending institutions, not to protect consumers from deceptive and unsafe products."
But she is less than sanguine about the chances of such legislation getting through. "The U.S. lived with usury laws from colonial days through the early 1980s, when a loophole in a federal banking law effectively abolished them. The problem is not whether a practical federal usury limit could be established, particularly if the rate were pegged to inflation. The problem with instituting a new usury law is politics. The credit industry hires a lot more lobbyists than the consumer advocacy groups, and the creditors have been almost uniformly opposed to any usury laws."
Clinton, Obama, and the rest of the Democratic Congress may yet get another chance to go on the record on this issue: On May 15, the "Stop Unfair Practices In Credit Cards Act" was introduced by Democratic Senators Carl Levin of Michigan and Claire McCaskill of Missouri. "We have to fight for those who have not hired dozens of lobbyists to make sure that American consumers are not getting ripped off and are fully informed of how these companies are manipulating their financial security," McCaskill said of the bill.
And Chris Dodd, long known as a friend to Wall Street, has held hearings on credit card practices in his new position as chair of the Senate Banking Committee.
None of this means that Americans who've been planning to cut up their cards should put away the scissors and go shopping. If the bill ever makes it to a vote, it will face a nearly insurmountable obstacle: All told, in 2006, financial and credit card companies gave $7 million in campaign contributions, and banks $25 million, to candidates of both parties, according to the Center for Responsive Politics. Leading the pack, with $378,000, was Hillary Clinton.