Among the dizzying array of amendments to the financial reform package now under debate in Washington are a series aimed at the credit card industry. Senator Sheldon Whitehouse is co-sponsor, with Republican Senator Thad Cochran of Mississippi, of a measure that might have the best shot at becoming law.
The bill would restore the states' ability to limit interest rates imposed by out-of-state lenders on their residents. In 1978, in what Democratic Senator Sherrod Brown of Ohio calls "the most harmful Supreme Court decision that most Americans have never heard of," the high court ruled that the laws in a bank's home state control its interactions with customers all over the country.
As the New York Times notes, that ruling pushed credit card companies to set up shop in states like South Dakota and Delaware that allow the highest interest rates.
“Right now, because of this loophole, the big corporations trump state governments,” Whitehouse said at a press conference yesterday.
This bill makes sense. Let's see if sense will trump industry pressure.