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South Dakota Dems and the Credit Card Bill

May 12, 2009 - by Donny Shaw

Looking at the Credit Cardholders’ Bill of Rights Act of 2009, which is being debated right now in the Senate, I see that I missed something interesting in the voting from when the bill went through the House. The vote to pass the bill in the House was strongly bipartisan, with 82 percent voting in favor, including 105 Republicans. As I look back at the vote now, the thing that surprises me is that the Democrats were not unified in their support of the bill. A single Democrat voted against it — Rep. Stephanie Herseth Sandlin [D, SD-0] (pictured at right).

The Sioux Falls Argus Leader has Sandlin’s explanation for her vote:

“In a time of economic instability and decreasing credit availability, I think it’s essential that we consider the full impact of limiting access to credit,” she told reporters before her vote. “People need access to credit while at the same time striking at the deceptive and unfair practices that we know have been going on, and this bill, in my opinion, doesn’t strike the right balance.”

She also was the only Democrat in the House to vote against a similar bill last year. Sen. Tim Johnson, D-S.D., broke from his party as well in March when he joined Republicans on the Senate Banking Committee in voting against a similar measure.

It’s not a coincidence that the only two Democrats in Congress who oppose this legislation are both from South Dakota. That’s where Citibank is located and where several other big credit card providing companies – Great Western Bank, Total Card Inc., BankFirst, Capital Card Services, HSBC, PREMIER Bankcard, and Wells Fargo – are officially incorporated.

Why South Dakota? Well, ever since the Supreme Court’s 1978 ruling in Marquette v. First Omaha Service Corp., big national banks haven’t had to follow state usury laws for the states they do business in, just the state they are incorporated in. So, for example, Massachusetts may have a usury law capping interest rates at 20 percent, but since Citibank is technically based out of South Dakota, which has no restriction on usury, they can can charge their Massachusetts customers whatever rate they want.

It will be interesting to see how Sen. Tim Johnson [D, SD] votes on the modified version of the credit card bill in the Senate. Last month he voted “no” on an amendment to the budget resolution “to provide for a deficit-neutral reserve fund to establish a national usury law,” but so did 24 other Democrats.

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  • jtimberman 05/13/2009 4:53am

    Why do we need legislation for this? People should have the freedom to be stupid with their money. More regulation increases costs across the board.

  • Anonymous 05/13/2009 7:18pm

    I describe Sioux Falls to people who are interested like this: It’s Pottersville. Before 1978, it was a town Jimmy Stewart would be comfortable in: strongly middle-class, union workers who made good wages. Then Reagan broke the unions. The banks dictated the laws they wanted. Most jobs became minimum wage, few or no benefits. The state thought, hey, let’s make gambling legal! And so, bang on, we’ve got the nightmare scene from It’s a Wonderful Life.

  • Anonymous 05/14/2009 6:04am

    Where are all Obama/ACRON law suits over mortgages and Deleware CC agreements?

  • Anonymous 05/14/2009 8:13am

    This will simply cut off access to credit and may cause CC companies to go through harder times. Plus, more customers will write bad checks to get across. Unfortunately, the overdraft fee is not considered an interest rate by the omniscient government regulators, so there will be no similar outrage there. Just let people be dumb with their own money and punish bad behavior; don’t be tyrannical and dictatorial.

  • Anonymous 05/19/2009 9:10am

    repbulicans snet the country over a cliff from people losing there
    housing to savings to retirement accounts.. and jobs and the crooked
    stock market where no one has gone to jail yet..
    I know repbulicans are going to vote against anything that will help the maerican get back on there feet and anything else now there going after nancy pelosi vbut we democrats want them to the more they talk the more evidence we will have at the trials

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