Dodd Gets GOP Support for Credit Card Act

Sen. Chris Dodd is looking to push through a credit card reform act that would benefit consumers, and the chances of the bill’s passage have been greatly increased by a compromise with fellow Banking Committee member Sen. Richard Shelby (R-AL) announced yesterday.

Dodd had sought to ban all interest rate increases on existing balances. Under the compromise bill, card issuers would be allowed to retroactively bump up rates for any borrower whose payments are 60 days past due. However, if the borrower pays on time for six months, the card issuer would have to restore the original rate. The bill also prohibits card issuers from increasing rates during the first year a credit card account is opened and requires them to get customers’ permission to set up accounts so that transactions over the limit can be processed. Another provision would require card issuers to post credit card agreements online. (Trejos)

A vote on the bill could come as early as this week. Other provisions in the reform bill would put restrictions on marketing cards to people under 21, and require a 45-day notice of any rate changes.

Besides helping consumers, a bill like this will also help Chris Dodd politically. Dodd has been portrayed as someone who is in the pocket of the big banks–well, the banks do not like this bill, and they’ve made their objections clear. This bill helps Dodd shore up support on the left, as well as reach out to consumers who have suffered rate increases without warning, or who simply find their credit card companies irritating. It’s yet another step in Dodd’s road to recovery.

Source
Trejos, Nancy. “Senators Cut Deal On Credit Card Bill.” Washington Post 12 May, 2009.

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7 responses to “Dodd Gets GOP Support for Credit Card Act

  1. A year ago Ben Bernanke and Taxman Tim Geithner decided to turn on the printing presses. Bloomberg has reported that they’ve printed $12.8 trillion (I think that doubled the money supply).

    Chris Dodd is the Banking Chair and on April 2 he opposed revealing the names of the banks that got that money by way of his vote.

    Now he sits down with Jane Hamsher and says he’ll “ask” for the names. He won’t get them and he won’t do anything more. Because he claims the Fed needs to conduct monetary policy “independently.”

    Hey Mr. Dodd… do you feel fiscal policy or foreign policy should be conducted independently? How about war policy?… obviously snark… he just sounds foolish. But someone please ask him why “monetary policy” must be independent, but everything else should be done by the elected officials.

  2. As an alternative to his credit card bill, he could work to eliminate the fractional reserve banking system that gave us the easy credit, cheap money and the bubble that is currently deflating.

  3. Dodd has helped to destroy our economic prosperity while stuffing his pockets with cash. Once you have lost your credibility, it is difficult to get it back. Anything Dodd does now is solely a political move to try and win back support. It won’t work and unfortunately for America, too little…too late.

  4. As an alternative to his credit card bill, he could work to eliminate the fractional reserve banking system that gave us the easy credit, cheap money and the bubble that is currently deflating.

    So what is the alternative to fractional reserve banking. How would it work? Does any country in the world today not use fractional reserve banking?

  5. AndersonScooper

    Genghis–

    I don’t think Dodd will get much of a bump from this when it does nothing to cap rates, which frequently run as high as 30% on struggling consumers.

    Also, none of this takes effect until nine months from now.

    This bill is the definition of safety-valve legislation, and it irks me that Democratic leadership, both in the Senate and the House, isn’t making each and every Congress-critter take a vote on capping rates. Who’s on the side of the credit card companies, and who’s on the side of the American consumer?

    PS– 29% interest rates in a zero inflation environment? Friggin’ un-American!

  6. GMR… wow… I can barely believe someone actually responded with a comment about monetary policy and not Dodd.

    Anyway…

    So what is the alternative to fractional reserve banking.

    full reserve banking

    How would it work?

    banks don’t loan money from thin air. First the bank needs to get a deposit, then they can loan it out. At the moment, they are “leveraged” and are only required to keep a “fraction” of the money on hand in relation to their total loans.

    Does any country in the world today not use fractional reserve banking?

    I’m not an expert. And wikipedia states This practice is universal in modern banking. but I’m not sure how exactly it’s defined. For instance, I lived in Vietnam from ’95-’98. At the time (and friends confirm it hasn’t changed since), one did not buy a house with a mortgage. One bought a house with actual gold pieces. Yet the VN banking system interacts with the rest of the world, so I’m not sure what is meant by “modern banking.”

    I’m not an absolutist though. Until there’s a national dialogue, I’m flexible on this. But I think a good starting point would be to eliminate credit cards. Debit cards work and it would drastically reduce America’s collective overextension of credit. Or just return to charge cards and pay it off at the end of the month.

    Dodd could also advocate legislation that eliminates loans for cars… thereby reducing America’s overall debt burden. Or he could advocate legislation that prohibits car loans in excess of three years… or at least no more than five years. I mean, I understand that until 12-24 mos ago, people were taking out 7 to 8 year loans on cars. That seem irresponsible to me because you’re going to have repair bills by then. Yet (if that’s true), it’s not much different from the “no money down, no income verification” mortgages that were being dished out.

    I’m not philosophically behind full reserve banking 100%. I just want Dodd to jumpstart a dialogue on the three Fs:

    1) fiat money
    2) fractional reserve banking
    3) federal reserve

    But instead we see him oppose transparency and state that monetary policy must remain independent.

    At minimum, someone needs to ask him why independence is needed for monetary policy, but not war policy or fiscal policy. Frankly, I’m not sure Dodd would have an answer.

  7. Who’s on the side of the credit card companies, and who’s on the side of the American consumer?

    I thought Dick Durbin was pretty clear. The banks “own” the US Congress.

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