The Senate today voted 90 to 5 for legislation that would ban arbitrary interest rate hikes as part of an overhaul of credit card industry rules. Sen. Bernie Sanders voted for the bill, which includes provisions he has championed for years, but he pledged to continue his fight for a nationwide cap on interest rates. "It is a good bill. It is an important step forward in protecting consumers, but I am going to be back on this issue of usury. In the United States of America we have got to finally tell banks and credit card companies that it is simply not acceptable to charge people 25 percent, 30 percent or 35 percent interest rates," Sanders said in a Senate floor speech.
Senators last week turned back an effort by Sanders to set a maximum interest rate of 15 percent. Senate Banking Committee Chairman Christopher Dodd (D-Conn.), who voted for Sanders' amendment, said "there is a strong desire in the country to get our arms around the issue of exorbitant interest rates."
The overall bill, Sanders added, "is a step forward in protecting consumers." Under The Credit Card Accountability, Responsibility and Disclosure Act, lenders would have to post their credit card agreements online, let customers pay their bills online or by phone for free and give customers 45 days notice before interest rates are increased. Another provision says customers would have to be more than 60 days late on a payment before seeing rates go up on an existing balance.
Sanders said the legislation includes provisions he has advocated since he served on the House Financial Services Committee.
- On July 14, 2003, then-Congressman Sanders introduced the Credit Bait and Switch Prevention Act (H.R. 2724) to prevent credit card issuers from jacking up interest rates on consumers who always paid their credit card bills on time and never went over their credit card limit.
- On July 23, 2003, then-Congressman Sanders, by then the ranking member of the Financial Institutions and Consumer Credit Subcommittee, offered an amendment with Congressman Spencer Bachus (R-Ala.) and Congresswoman Carolyn Maloney (D-N.Y.) to prohibit credit card issuers from using negative information contained in a customer's credit report, such as a late payment on a student loan, a lower credit score, a new mortgage, or a new loan to pay for a medical emergency, or an error in a credit report as a reason to increase credit card interest rates. Alan Greenspan, who was chairman of the Federal Reserve, opposed the amendment that lost by a vote of 44 to 22.
- On September 10, 2003, then-Congressman Sanders offered an amendment in the House to ban the credit card interest rate bait and switch. This amendment lost by a vote of 142-272 in the full House of Representatives.
- On April 13, 2005, then-Congressman Sanders introduced the Loan Shark Prevention Act (H.R. 1619) to cap interest rates on all loans at 14 percent; ban the credit card interest rate bait and switch; and cap bank fees at $15. The legislation garnered 24 cosponsors.
- On March 12, 2009, Senator Sanders introduced the Interest Rate Reduction Act (S.582) to cap interest rates on all loans at 15 percent, the same cap that Congress imposed on credit union loans in 1980. The bill currently has five co-sponsors.