Dodd the populist hero?May 10, 2009 - by Donny Shaw
Can Sen. Chris Dodd [D, CT] regain the public’s trust after he inserting a loophole in the stimulus bill that cleared the way for the AIG bonuses? Ever since the AIG fiasco, he’s been trailing in the polls, as far as 16 points behind a potential Republican challenger.
This week, when the Senate takes up House-passed legislation to reign in abusive credit card company practices, Senator Dodd will be leading a push to create even stronger consumer protections, and sooner. As credit card debt soars and the ever-popular President Barack Obama endorses reform, this is a good issue for Dodd to get behind if he wants to restore the public’s faith in him that was lost after AIG. But it is not a new issue for Dodd. He has been leading the push in Congress for similar legislation since 2004.
As approved by the House last month, the bill, called the Credit Cardholders’ Bill of Rights Act, would prevent credit card companies from raising interest rates on existing balances, require the companies to give customers 45 days notice of rate increases, ban the issuance of credit cards to people under the age of 18, and outlaw various fees. Under the bill the new rules would take effect one year after it is signed into law, or July 2010, whichever comes sooner. The House bill mirrors, almost perfectly, a set of new credit card rules that have already been approved by the Federal Reserve. More details in this earlier post.
Senator Dodd has been working out a compromise with Banking Committee ranking member Sen. Richard Shelby [R, AL] on a version of the bill that is somewhat stronger than the House’s. Among the changes to the House bill Senator Dodd is pushing for are:
- Removing a provision that would allow credit card companies to raise interest rates retroactively if a cardholder is more than 30 days late on a payment.
- Adding a requirement that gift cards be valid for five years and ban “dormancy” fees.
- Making all the rules take effect sooner. Dodd wants the bill to go into effect nine months after being signed into law; the House version would take 12 months.
Senator Shelby is trying to keep the bill as close as possible to the House version, which was approved by in the House by a strong bipartisan vote of 356-70. The Senate’s first vote on the legislation this week will take place on on a Dodd/Shelby amendment to the House version, details of which have yet to be fully confirmed. Since it will have the backing of both the leading Democrat and Republican on the Banking Committee, that amendment is expected to pass. After that, the rest of the Senate will begin trying to pass amendments to the Dodd/Shelby compromise in order to bring it closer to their ideal for the legislation. Democrats will be looking to make up any concessions made to Shelby by seeking more restrictions to what they see as unfair rate hikes and fees, while Republicans will attempt to bring the bill back to the way it looked when it passed the House and maybe even try to add additional concessions for the credit card companies.
Related: Here’s President Obama’s address this weekend calling on Congress to quickly pass strong credit card reform legislation so that he can sign it into law by Memorial Day: