The House appears likely to clear sweeping new restrictions on the credit card industry Wednesday — a major success for President Obama that would directly affect far more Americans than any of his other economic initiatives to date.
The legislation, which would curb interest rate increases and other practices that have been widely criticized, passed the Senate on Tuesday, 90-5, dealing a major blow to the industry.
House Financial Services Chairman Barney Frank, D-Mass., said he expects the House will vote on the bill (HR 627) Wednesday morning, clearing the way to meet Obama’s Memorial Day deadline for the credit card legislation.
“At a time when jobs are being lost, homes are being foreclosed, retirement accounts are being eroded, to have the industry reach in and be as abusive . . . to consumers, it needed to stop, it needed to change,” said Sen. Christopher J. Dodd, the lead author of the Senate version of the bill.
If all goes as planned, Obama will have the opportunity to sign before Memorial Day three major pieces of financial legislation — the credit card measure, a bill (S 896) designed to address the foreclosure crisis and expand the borrowing authority of the Federal Deposit Insurance Corporation, and a bill that would combat financial fraud (S 386).
House Democratic leaders appear to have found a procedural solution for a thorny provision, unrelated to anything else in the bill, that would allow people to carry firearms in national parks and wildlife refuges where permitted by state law.
The language was added to the Senate version of the bill by an amendment offered by Tom Coburn, an Oklahoma Republican.
The House will hold a separate vote on the gun language before the chamber votes on the rest of the credit card bill. If the House votes to approve both, as expected, the bill will be cleared for Obama’s signature.
The White House has not indicated how it views the firearms language, but the bill is not expected to draw a veto threat.
The separate vote on the gun language was necessary to appease liberal Democrats in the House, who want an opportunity to officially register their opposition to it.
The overwhelming support for the bill in both chambers belies the difficulties leaders had in getting it to the finish line.
A battle over amendments in the Senate had lawmakers shaking their heads throughout much of the last week, questioning whether the bill would make its way to a vote for passage given other major legislation on the chamber’s agenda.
Dodd ended up incorporating into a manager’s amendment several of the more than 60 amendments filed to the bill. Among the provisions in the 40-page manager’s amendment were a clarification of the Federal Trade Commission’s rule-making authority on mortgage lending, privacy protections for college students and language designed to prevent the deceptive marketing of credit reports.
The manager’s amendment was adopted by unanimous consent Tuesday, opening the door for the final vote.
For Dodd, the vote marked one of the most significant victories of his career — something made all the more important by Dodd’s difficult political position at home.
“What happened today was, for the first time really, we did something that directly affects millions of consumers across this country,” said Dodd, who is facing a tough re-election battle next year.
Industry Remains Opposed
Slapped with a major defeat, the banking industry continued to stand in opposition to the bill, saying it would force them to raise interest rates and reduce credit lines for all customers — even those who are current on their payments.
The legislation “fundamentally changes the entire business model of credit cards by restricting the ability to price credit for risk,” said Edward L. Yingling, the president and chief executive of the American Bankers Association.
But lawmakers wasted little time in touting their victory over an industry facing widespread complaints over recent interest rate increases and other moves that pinched consumers in the midst of the recession.
The financial services industry “underestimated the ability of this Congress to turn public outcry into public policy,” said Sen. Carl Levin, D-Mich. “The Senate legislated over the objections of powerful forces in this country and we prevailed.”
The House passed its version of the credit card bill, 357-70, on April 30.
Dodd and Richard C. Shelby of Alabama, the Banking panel’s ranking Republican, struck a deal May 11 on Dodd’s substitute amendment.
The compromise agreement would allow credit card companies to increase interest rates on existing consumer balances only if a payment is 60 days or more past due. It would prohibit rate increases at any time during the first year of an account’s activation.
The bill also would require card companies to periodically review any increases to the interest rate charged to a cardholder, with the idea that the rate would be lowered if the review shows the borrower could be considered less risky.
The measure would require credit card companies to comply with the new rules within nine months of enactment. New Federal Reserve Board regulations on credit cards, many of which are similar to those in the legislation, take effect in July 2010.