Senate passes credit card crackdown

Posted on May 19, 2009. Filed under: Uncategorized |

 The Senate passage was expected, but it took a coalition led by Banking Chairman Chris Dodd.

The Senate has easily passed a major crackdown on credit card companies, agreeing to impose strict new rules on interest rates, fees and other controversial billing practices.

The Senate vote was 90-5, and the House is expected to accept the Senate’s version of the bill and send the legislation to the White House for President Obama’s signature by the end of the week. Even though the vote was overwhelming, the Senate had to overcome an intense, well-funded lobbying effort by the credit card industry, which tried to water down the legislation, known as the Credit Cardholders Bill of Rights.

The bill would ban retroactive interest rate hikes, freeze certain credit card rates and give consumers more time to catch up on overdue bills. Interest rate hikes keyed to late payments could not go into effect until a customer is 60 days late. And credit card companies would no longer be able to charge a fee for payment by phone or the Internet. The bill would also require credit card companies to inform customers of interest rate increases 45 days in advance.

The Senate passage was expected, but it took a coalition of Banking Chairman Chris Dodd (D-Conn.), the committee’s top Republican, Richard Shelby (R-Ala.), and Sen. Carl Levin (D-Mich.) to push the legislation to final passage.

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Passage of this landmark crackdown on a disliked industry is also a political win for Dodd, long accused of being too cozy with the financial industry, who faces a tough re-election in 2010.

The vote on similar legislation was 357-70 in the House, and the overwhelming vote in the Senate Tuesday morning is indicative of how much momentum the legislation has, even as the credit card industry warns that such a crackdown will limit the availability of credit. The only minor victory for the credit industry came last week when the Senate rejected an amendment by Sen. Bernie Sanders (I-Vt.) to cap all credit card interest rates at 15 percent.

Obama has said he wants the legislation on his desk by Friday.

-Associated Press

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