Tough Day for Credit Card Companies

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It’s a tough day for the credit card industry. In spite of all the lobbying spending ($9,170,573 in 2009) and all those campaign contributions ($7,367,066 in 2008), they couldn’t prevent a landslide loss in Washington. Today, the Senate approved a bill to place regulations on the credit card industry for the first time in decades by a vote of 90-5. The House approved the bill last week by a lopsided 357-70 margin.

There are very few measures in influence when looking at such a lopsided victory, particularly on what would once have been an uphill battle against the credit lobby. All three lawmakers representing Delaware, that little slice of bank heaven, voted for final passage of the bill. The only ones staying true to their contributors and constituents were the three South Dakotans in Congress.

South Dakota is a special case. What peaches are to Georgia, credit cards are to South Dakota. (Watch this PBS Frontline report for the full history.) Rep. Stephanie Herseth Sandlin and Sen. Tim Johnson, both of South Dakota, were the only two Democrats to oppose the bill. Johnson received $349,800 from finance and credit companies over the course of his career, with nearly half of that ($154,350) coming from 2007-2008. Herseth Sandlin has not received a significant amount of money from the credit card companies. I’m sure she received enough phone calls from credit card employees in her state to convince her though.

Despite the epic loss for the industry, the credit cards did have a few important victories. According to CBS News, “the American Financial Services Association urged all U.S. senators to oppose all rate caps and so far they have been successful.” So, there’s that.

All in all, a tough day for a big time lobbying player. As a holder credit card debt myself, I can assure that Americans don’t share their grief. When credit card lobbyist Bill Himpler says, “To our critics? You know, I’m not going to say anything,” it’s because he knows better than to say anything at all.

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  • John Thacker

    Apparently Mark would prefer simply not to have a card in the first place, or have a lower credit limit to start. If you make consumers with poor credit less profitable to credit card companies, they’ll offer fewer cards, especially to the poor. Perhaps they have offered too much credit to people with low credit scores in the past. But I fear that people will turn to payday loans. And if payday loans are outlawed, they’ll turn to pawn shops. And if those are outlawed, loan sharks.

    If you really believe that people who carry a balance are super profitable for the credit card companies, then you might even believe the credit card companies when they tell you that if this law reduces the profit from such people, they’ll respond by cutting cash back benefits and the like. It might be more possible that people who carry a balance are only marginally profitable, in which case they’ll simply not offer those people credit.

    Thanks for the reminder that politicians don’t just pay attention to contributions, but also to popular sentiment. Even when I disagree with popular sentiment.

  • Mark

    we have these two idiots from south dakota voting against the bill. this Bill is the best thing that has happen to card holders. we need an amendment to this. card holders should be allowed to close account with out destroying fico score do to credit companys increasing interest rates until the law takes place.
    laws need to be passed about credit companys reducing credit limits without notice. this is what i am experiencing