The credit card bill has passed in both chambers of Congress, and will soon be signed into law by President Obama. Maybe I’ll save up all of the money from those arbitrary fees the banks have been extracting and buy myself something nice. Like a new pistol to take along on my next trip to Yosemite – something I can do now thanks to another recently-passed piece of legislation (more on that below). Because you never know in this crazy world.
How crazy is it out there? The House voted on Wednesday to adopt the credit card reform package by a vote of 361-64. There were no changes made after the Senate approved it 90-5 a day earlier.
Call me cynical, or suspicious, but any legislation that enjoys such widespread bipartisan harmony can’t really amount to much. Can it? All along, we were told that the banking industry would fight these changes tooth and nail. Even when the House first passed a version of the bill three weeks ago, the conventional wisdom was that it would face a much tougher fight in the Senate.
What happened? The new conventional wisdom is that the tide of public anger rolling in against the banks was too strong to withstand, so the banks ducked and covered and got the best deal they could. They did manage to beat back Sen. Dick Durbin’s amendment to allow merchants (whose 1-2 percent fees paid on credit card purchases create a substantial revenue stream for the issuers) to give cash-paying customers a discount. Sen. Bernie Sanders’ idea to cap card interest rates at 15 percent went nowhere.
The gun measure, which will allow people to carry loaded and concealed weapons in state parks and wildlife refuges, couldn’t have been a major factor. A separate vote in the House on Wednesday cleared that provision by a 279-147 vote, giving Republicans an effortless victory on a measure they could have tacked onto any piece of legislation.
My guess is that the banks knew that many of their billing practices were ridiculous and petty. Some of the provisions in the bill could easily have been mandated by the credit card issuers, including:
- Prohibiting over-the-limit fees unless the customer has signed up to allow purchases that would put them over.
- Making sure bills go into the mail no later than 21 days before the due date.
- Applying payments first to portions of a balance that carries the highest interest rate.
- Informing borrowers how many months it will take them to pay off their entire balance if they pay only the minimum due each month.
Although the banks are still making the case that the law will have the unintended effect of punishing all credit card users with tougher restrictions, they didn’t object all that strenuously, probably because most of the bill’s provisions won’t take effect until February 2010. That will give them plenty of time to continue to raise rates and fees, get rid of unprofitable customers, and gauge the backlash to raising annual fees and restricting rewards programs, which would hurt creditworthy customers the most. Randall W. Forsyth, writing in Barron’s, makes a sound argument about the basic unfairness of these likely changes.
If the economy continues to slide, February 2010 won’t bring consumers much relief.
– A freelance writer in Silicon Valley, Landon was a reporter, sports writer and
editor at The Associated Press in
Portland and New York City from 1997-2006.
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I absolutely agree with you. I think that the credit card industry decided that they had better let the bill pass now before credit conditions got any worse and they faced calls for tougher reform.