Credit Card Interest Rate Cap Cancelled by Congress
Despite a groundswell of grassroots support for the measure, the Senate voted to kill an amendment to the financial reform bill that would allow states to set maximum credit card interest rates. Rhode Island Senator Sheldon Whitehouse sponsored the measure, which was designed to restore the power to enforce local usury laws to state lawmakers.

Under current rules, interest rates can only be capped by states in which credit card companies have headquartered their financial operations. Therefore, many banks choose to operate in places like South Dakota, where lawmakers lifted an interest rate cap to lure high-paying financial jobs to Sioux Falls. As an out-of-state lender, a South Dakota-based credit card company need not adhere to the same rules imposed upon community banks doing business in their home states.

Critics of the measure expressed concern that it would create too much animosity between Wall Street and Capitol Hill. Under significant voter pressure to pass the overall financial reform package, already facing opposition from lobbyists, Democrats crossed party lines to form a 60 vote majority against the amendment. The financial reform bill went on to clear the Senate, and now awaits reconciliation with the version proposed by the House of Representatives.

About the Author

joe

Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.