Senator's bill moves to cap interest rates

Written By Michelle Monroe

ST. ALBANS — As part of his effort to pass a usury law limiting credit card companies to a 15 percent interest rate, the same limit which applies to Savings and Loans, U.S. Sen. Bernie Sanders, I-VT, asked Vermonters and others to send him information about their experiences with credit card companies.

Some of the more than 1,000 responses have been gathered together in a booklet released to the public yesterday.

The responses show a pattern of interest rates raised for no discernable reason, often by companies receiving bailout funds from the federal government.

Sanders released Vermonters' comments without fully identifying those who contributed comments.

James, of Highgate, wrote: "I once had Bank of America charge me 27.99 percent interest when I had only a $53 balance on one of their cards, I of course, paid it in full then closed out the card to avoid doing business with those crooks! " James says his credit score is 960 and he has never been late with a payment.

Anne, of Winooski, also said she had Bank of American raise her interest rates unexpectedly: "During the past couple of years we have seen food, gas, utilities, and taxes go up tremendously and now to put salt in the wound, the credit cards companies are changing the rules in the middle in the game--and using the taxpayers' money to do so."

According to ProPublica.org, a journalism Web site tracking the bailout, Bank of America has received $52.5 billion in bailout funds, as well as another $87.2 billion from the Federal Reserve.

In contrast, the State of Vermont will receive less than one billion in federal assistance under the American Recovery and Reinvestment Act (ARRA). Nationwide, ARRA funds dedicated to education from early childhood education to programs, to reduce the number of high school dropouts, to Pell grants for college students and adult job training programs, totals less than $50 billion by the Messenger's calculation.

Another bank frequently mentioned by those who wrote to Sanders was Citigroup. Citigroup has received $50 billion in bailout funds and an estimated $200 billion in guarantees from the Federal Reserve. Citigroup is estimated to have $301 billion in toxic assets resulting from bad loans.

Citigroup, according to SEC filings, is only being asked to absorb $39.5 billion of those losses with the Federal Reserve, Federal Deposit Insurance Corporation and Treasury Department picking up the rest.

The Homeowner Affordability and Stability Plan, the administration's plan to stem foreclosures and help homeowners remain in their homes has been allotted $50 billion in funds. Under the program, which provides incentives to banks that renegotiate mortgages with consumers at risk for default, Citigroup will receive another $2.1 billion and Bank of America $798.9 million. Thus far, only $14.27 billion of the funds have been committed. The amounts paid to banks will rise as more funds are committed.

Vermonters who contacted Sanders were angry about banks receiving bailout funds while simultaneously raising fees to taxpayers.

"When will I get help? I pay my bills, I pay my taxes, if I pay late I get a finance charge and it hurts my credit rating. When these big companies fall behind, they get my tax money, and I get to pay it back for them," wrote Sheila of Wilder.

"I feel that the credit card companies need to have a ceiling on interest rates and fees. They are stealing from us. We pay for the bailout and we pay the interest increases. They must think we are stupid," wrote Anne of Brattleboro, VT.

"People are outraged at having to pay 25 or even 30 percent interest on their credit cards - especially at a time when their tax dollars are bailing out the large banks that issue those credit cards," Sanders said.

Sanders' bill would cap interest rates at 15 percent, but would allow the Federal Reserve to raise that cap to 18 percent.

"I realize the odds are against us," Sanders said. "Over the last decade the financial sector has invested more than $5 billion in purchasing political influence in Washington. This includes funding some 3,000 lobbyists and huge amounts in campaign contributions. Do we have the courage to stand up to them? We have to try."