WHO OWNS the U.S. Senate?
Ask U.S. Sen. Dick Durbin, D-Ill., and you won't get the answer that's in the Constitution. As he told a hometown radio station last week, it's the banks who "frankly own the place."
Durbin's assessment came after 15 Democratic senators - including our own (sort of) Democrat Arlen Specter - joined all the Republicans to kill a measure that could have forestalled 1.69 million home foreclosures and preserved $300 billion in home equity. The proposal would have allowed bankruptcy judges in certain cases to reset the terms of mortgages. Even though the banks stand to lose a lot if the foreclosure crisis continues, they fought the proposal - and won.
Not only do the banks "own the place," but they paid for it with taxpayer money. Many of the same institutions that are receiving billions in taxpayer bailouts still employ armies of lobbyists and threaten to cut the millions they make in campaign contributions if they con't get what they want. Not surprisingly, many of the senators who voted with the banks have received millions in contributions from them.
And now the banking industry has turned its sights to diluting legislation which would reduce unfair credit-card practices and which may come up in the Senate as early as this week.
A wave of voter anger - and the strong endorsement of President Obama - pushed the U.S. House of Representatives to vote overwhelmingly (357-70) last week for a Credit Card Holders' Bill of Rights. But a similar, slightly stronger bill barely got out of the Senate Banking Committee by a 12-11 vote last month. So the proposed safeguards are anything but safe, either in the Senate itself or, if the bill passes, in the conference committee that will meet to reconcile the two versions.
If you are among the 80 percent of Americans who use credit cards, you probably have your own horror story of interest rates raised without notice or credit lines reduced. A study sponsored by the Pew Charitable Trusts puts numbers to the anecdotes: Analyzing the practices of more than 400 different credit cards offered by the 12 largest companies, it found that 100 percent of them, every single credit card, has policies that harm consumers. Pew also found that 93 percent of the cards allowed the issuer to raise interest rates at any time for any reason and without notice.
Add that to a host of other unfair practices that stem from allowing one party to a contract to change its terms at will and American cardholders are at risk "of sudden, potentially drastic price increases, which can seriously impair a household's stability and spending power," says Pew. Just what the nation needs when Americans face increasing economic insecurity.
The Federal Reserve already has passed stricter regulations on credit-card companies that will take effect next year. The House bill adds restrictions to take effect at the same time. For example, payments made by cardholders that are over the minimum would have to be applied first to the portion of the balance with the highest interest rate - a reversal of the practice of many credit cards now. The Senate bill is slightly stronger and would take effect earlier, within nine months. Pressure by the banking industry on individual senators to stop the changes is growing. So should pressure from the voters to protect consumers.
"When the voters speak, some elected officials listen," Dick Durbin said last week. "So I hope . . . that people in the country will stand up and say to Congress, 'You've got the wrong friends.' " It's what the voters should tell the Senate right now, as it decides who should come first, the banks or the people. Say it loud. *