Senate Majority Leader Harry Reid (D-Nev.) has asked members of the Banking Committee for their consent to move the bill directly to the Senate calender without the panel addressing it first. The move is an indication that Democratic leaders want the option to consider the bill at any time, though it doesn’t guarantee that they’ll do so.

Mark Udall

There’s no word yet from Banking leaders if that consent has been granted. Still, the strategy is significant because if Republicans want to block the motion, they’ll have to go on the record to do so.

The legislation, sponsored by Sen. Mark Udall (D-Colo.), is designed to tackle a problem the Democrats themselves created.

The credit card reform legislation that Democrats pushed through Congress in May aims to eliminate the most abusive practices adopted by credit card issuers. It bans, for example, a number of hidden fees and prohibits companies from applying rate hikes to existing balances. Yet most of those reforms don’t take effect until late February. To beat the deadline, many companies have raised fees and rates while it’s still legal to do so.

So now Democrats, themselves responsible for delaying the reforms, are trying to get them installed more quickly. The House on Wednesday passed a bill to bump up the implementation date to Dec. 1. The Udall bill proposes the same expedited timeline.

Stay tuned…

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The Obama team’s regulatory proposal will only mark the beginning of a policy debate that will likely last for months. But make no mistake, serious bank reform is one of the most important steps the government can take to make the economy accountable to ordinary citizens and CEOs alike. Without substantive change in the financial sector, the next meltdown could already be underway.

As Laura Flanders explains in a video from GritTV, there is a difference between how “healthy” a bank appears to the U.S. Treasury and what it actually does for ordinary people. The TARP money was supposed to serve a public purpose by freeing up funds that could be lent out into the economy. But the very banks now going off the public payroll have been retroactively jacking up interest rates on credit cards all year and spending millions to lobby against legislation that would prevent foreclosures. Small surprise, then, that the state of the U.S. housing market is as bad as it has ever been.

“The lesson is pretty clear: you cannot stabilize the mortgage market and undercut the working family at the same time, you just can’t,” Flanders says.

This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

For years, newspaper editorials have denounced payday lenders for systematically exploiting the most vulnerable members of society, including members of the U.S. military, who are often targeted as a result of their reliable paychecks. The solution to the problem is as simple as the business is repulsive: Capping annual interest rates on all consumer credit products at 36% would make this kind of predation impossible.

Nevertheless, the payday loan industry has been able to escape a regulatory crackdown via an intense and sustained lobbying effort. Senate Banking Committee Chairman Chris Dodd, D-Conn., is now parroting payday lending lobbyists. Since payday loans are supposedly paid back within a matter of weeks, Dodd and the payday lending lobby say that it’s unfair to hold them subject to the same standards as a 30-year mortgage.

The argument is insane. No bank would ever get away with charging a 36% interest rate on a mortgage. Even the most predatory subprime mortgages didn’t have interest rates anywhere near that high. But Sebert and Murdoch go further, highlighting a report from the Center for Responsible Lending which found that payday lenders make 90% of their revenue from borrowers who do not pay their loans off on time. The loans are structured to be so expensive that consumers become trapped into making payments for the long-term, often spending thousands of dollars over multiple years to get out from under an initial loan of just a few hundred dollars.

This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

Colorado Democratic Sens. Michael Bennet and Mark Udall backed the measure introduced today by ultra-conservative Sen. Tom Coburn, R-Okla., following a weekend compromise by Senate Banking Committee members that further watered down some consumer protections but still not to the liking of the lobbyist-heavy financial industry.

The 67-29 bi-partisan vote, with one Republican defection with the “no” votes, adds a possible legislative override to the court-blocked Bush Administration 11th-hour rule to permit loaded, concealed firearms in national parks, historical centers and wildlife refuges.

The gun rule is currently stymied by a temporary injunction issued by U.S. District Judge Colleen Kollar-Kotelly in response to a complaint filed by the Brady Campaign to Prevent Gun Violence and National Parks Conservation Association. The Obama Administration decided last month that it would not defend the rule in court after the judge called the government’s process for implementing the gun regulation “astoundingly flawed.”

Poison pill amendments are not unusual in Congress but the attempt to sink a hugely popular law to beef up consumer protections against the predatory credit card industry is curious, at best.

More puzzling is Udall’s vote to support the Coburn Amendment — especially, as a leading proponent of the reform bill who earlier today released the text of a floor speech urging his Senate colleagues to support the Credit Card Accountability, Responsibility and Disclosure (CARD) Act.

Neither Udall or Bennet’s offices could be reached for comment.

Several credit card companies have launched a new Web site designed to help struggling card users manage their debts amid the economic downturn. The site includes tips to avoid penalties and links to access counseling services. But the fan favorite has to be an interactive tool allowing consumers to calculate the minimum installment required to pay off balances within a given time frame. It’s worth a whirl.

For example, a customer wanting to pay off a card balance of $8,329 — the average credit card debt per U.S. household last year, according to The Nilson Report — at an interest rate of, say, 15 percent within five years would learn that the monthly payment would be $198. If the same customer could afford only $120 each month, she would learn that it would take 161 months to pay down the same balance, etc. It’s an instant lesson in precisely how long you’ll be tethered to that flat-screen purchase.

The Web site arrives as Congress is poised to pass legislation to protect consumers from some of the most commonly abusive tactics used by card companies, such as hiking interest rates on existing balances and advertising “fixed-for-life” rates that are anything but. The companies’ new PR campaign, it seems, is designed to lend a sense that the industry also has the interest of consumers at heart.

Funny, then, that these are the same companies that have fought to water down the consumer protections currently flying through Congress. Funny, too, that they’re also the same companies that lobbied successfully to delay the implementation of those congressional reforms for at least nine months. Now they’ve launched a tool to “educate customers struggling to make their credit card payments” after they just fought to preserve the right to hike rates on those same customers retroactively?

In light of those efforts, their shiny new Web tool suddenly takes on a duller hue.

The plan hit a temporary roadblock when Sen. Ben Nelson, D-Neb., tried to scuttle the legislation to benefit lenders in his home state. As Benen explains, the student loan proposal wouldn’t have cleared the Senate without Nelson’s support. With 60 votes needed for any proposal to clear a filibuster, Obama usually needs every Democrat he can get. But instead of diluting the plan to win over Nelson, Obama just went around him by forging an agreement with negotiators in the House and Senate. The student lending changes will be pushed through the budget reconciliation process, allowing the measure can pass the Senate with just 51 votes, a situation which all but guarantees passage of any measure.

If Obama can win so easily on student loans, he can win on stalled credit card reform, but he has to move quickly.

Unemployment call centers are being completely overwhelmed by the volume of laid-off workers seeking relief. As Marty Durlin notes for High Country News, The Colorado Department of Labor and Employment is currently taking more than 10 times the call volume it received during the recession of the early 1990s. As job cuts continue to escalate, people are relying more and more on credit cards to fund necessities. The recession is happening right now. Reform can’t wait.

This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

Mike Lillis, congressional reporter for our sister site The Washington Independent, examines the winners and losers in the latest setback on credit card reform to rein in outrageous rate hikes and hidden fees.

Congress Delays Credit Card Reform: Democrats Who Decried Fed’s Timeline in December Now Offer Nearly Identical Plan

It’s one of the central components of the Democrats’ plans for reforming the finance industry this year, and among the most vital, supporters say, for protecting consumers from abusive lending practices in a tumbledown economy. Yet as Congress advances legislation reining in the most abusive credit card traps, both the House and Senate proposals have been watered down in recent weeks so that the protections likely won’t help card users for more than a year.

The delay — a concession to the banks, who oppose the changes — means that Congress’ reforms likely won’t arrive anytime sooner than the Federal Reserve’s new credit card rules, scheduled to take hold in July 2010. It also leaves consumers hung out to dry at an unwelcome time, as the recession deepens, unemployment rises and card issuers raise fees and interest rates on even their most reliable customers. Many observers wonder why, if some credit card practices are indeed unfair and deceptive — some say criminal — Congress isn’t acting more quickly to eliminate them. Some consumer advocates say the delay is yet another example of lawmakers prioritizing the banks above working families amid the downturn.

“While we expect the Fed to be weak and buckle under bank pressure, there is no excuse for Congress pandering to the banks and delaying implementation of legislation to stop practices that hurt working families,” Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group, wrote in an email. “Every day of delay is millions of dollars in unfair fee income. Every day of delay means more families cannot buy things to stimulate the economy (or save to buy things later), as they are forced to pay usurious credit card interest rates.”

The debate arrives as Democratic leaders are pushing legislation to restrict some of the finance industry practices that have been largely blamed for the current economic turmoil. Credit card reform is just one item on a list that also includes proposals to tighten regulations on mortgage lending and grant homeowners the option of bankruptcy to prevent foreclosure. But the power of the finance industry to sway Congress is never to be underestimated. Indeed, the mortgage bankruptcy bill has been stalled in the Senate for weeks, and reportedly faces an uncertain future despite robust support from Democratic leaders, including President Obama. The delay in the credit card reforms is just the latest example of what happens when leadership goals smack headfirst into political reality — and a lobbying juggernaut.

Clutch your credit score to your chest and read the rest of the story.

With bills actually moving through both houses of Congress, the credit card lobby is finding itself on the defensive, and turning out in force to oppose the legislation.

As we reported in January, Sen. Mark Udall is carrying the Credit Cardholders Bill of Rights reform legislation with New York Sen. Chuck Schumer. That bill would further clamp down on deceptive and unfair practices more immediately than those outlined in federal regulators’ new rules introduced in December that curiously won’t take hold until July 2010.

But his push in the Senate is interesting for several reasons.

Until now, most of the efforts to rein in the credit card industry have been limited to the House. Led by Rep. Barney Frank (D-Mass.), the House Financial Services Committee held several hearings last year, and the lower chamber passed Maloney’s bill in September. But…

Sens. Christopher Dodd (D-Conn.), who chairs the Banking Committee, and Carl Levin (D-Mich.) also have a credit card bill — a proposal that goes even further than the Maloney/Udall bill to protect credit card users. Consumer advocates have been loud supporters of both bills, but would likely prefer the Senate bill for these extra protections.

But, of course, the banks vehemently oppose any new restrictions, and anyone who doubts the industry’s sway in Washington forgets that Congress has directed trillions of taxpayer dollars to Wall Street in the past 12 months. That influence trascends party. A tough credit card bill would likely find fierce opposition not only from Senate Republicans, but from moderate Senate Democrats, particularly those representing big-bank hubs like Delaware and South Dakota. Bank supporters will no doubt point out the current financial troubles the industry is suffering (sidestepping, of course, that the banks themselves are largely to blame), and they’ll argue that 2009 is not the year to pass a credit card bill that would further pinch bank profits — even if it’s done to protect consumers.

Also, The Fed in December unveiled new restrictions on credit card issuers. Consumer groups and reform-minded Democrats applauded the changes as a good first step, and industry supporters will surely point out that the new rules do plenty to rein in credit card abuses.

However, The Fed’s changes don’t go into effect for another 18 months — hardly in time to help consumers manage their bills through the current recession.

Another factor that could affect this debate: Maloney, who’s been the most vocal proponent of credit card reform, is now vying to fill the Senate seat soon to be vacated by Hillary Rodham Clinton, who’s just a few short steps away from becoming secretary of state in the Obama administration. With that contest on her plate, Maloney will have less time to push her “Bill of Rights.”

It’s quite an equation to crunch, so don’t look for any predictions here.

(Photo/Duchamp, Flickr)

After a full year of woefully inadequate government responses to dire economic conditions, President-elect Barack Obama will inherit an economy that faces challenges on just about every front.

Progressive media has been keeping a spotlight on low wages, abusive credit card policies and weak student loan programs of late, while maintaining a focus on Obama’s pending economic recovery package.

In 2008, we witnessed the first serious fallout from deep structural flaws in the relationship between the nation’s public and private sectors, a relationship which fell short in every conceivable area from Wall Street regulation to the basic social safety net. The biggest economic stories of 2009 will be about how President-elect Barack Obama’s administration repairs — or fails to repair — that connection.

The first step in rebuilding a government that actually responds to problems before they reach the bailout stage will be Obama’s highly anticipated economic recovery package. As Dean Baker notes for The Huffington Post, the failure to date of Congress to pass meaningful stimulus legislation has been beyond negligent. Several Congressional leaders are cautioning that a bill will not be ready until February, but with more than two weeks to go before Obama’s inauguration, Congress has both the time and the public support necessary to pass a major bill before Obama takes up a chair in the Oval Office, as anyone who remembers the speed of Congressional action moved on the Wall Street bailout can attest.

The content of the legislation will reveal a great deal about Obama’s priorities. No president since Franklin Delano Roosevelt has entered office with an economic mandate as clear as that Obama enjoys, but one early warning sign for progressives is this week’s news that Obama plans to devote as much as 40% of the bill to tax cuts, a number that could go higher in legislative haggling with Congressional Republicans.

In a blog post over at The Washington Monthly, Hilzoy highlights the well-established economic fact that tax cuts are the least efficient method for boosting economic activity. Remember the February 2008 economic stimulus bill? Fat lot of good those $600 tax rebates did.

Public investment in areas like health care, green energy and research into sustainable manufacturing also leaves a stronger economy in its wake, and spending on basic infrastructure projects — roads, bridges, etc. — has been sorely neglected for the past eight years.

What’s more, as Ezra Klein notes for The American Prospect, the U.S. government seems to be in perpetual tax cutting mode, whether economic times are good or bad. While cutting the right taxes amid a severe recession can be justified, President George W. Bush’s decision to take a chainsaw to the IRS code during an economic boom cannot become a permanent facet of U.S. policy.

Imperative services provided by state governments are currently in severe jeopardy amid tax shortfalls prompted by lower housing values. The Public News Service discusses budget problems in Michigan and Missouri in pieces by Tony Bruscato and Laura Thornquist. Michigan faces cutbacks in health care for the poor and college tuition assistance programs, while Missouri needs to fill a $900 million hole by 2010.

State and local governments are likely to be $200 billion underwater next year, according to a piece by Robert Kuttner appearing in Chelsea Green. Even if Obama does not want to tackle major issues like universal health care in his first 100 days in office, he could fund community health clinics and make sure police officers, firefighters and teachers do not lose their jobs.

It has been easy to forget amid the mortgage market news of 2008 that other aspects of the economy have been under intense strain. In a frightening interview with The Real News, Leo Panitch details how a drop-off in working-class wages, fueled by a decades-long decline in the power of organized labor, has forced millions of Americans to turn to expensive consumer debt just to make ends meet.

That surge in credit card debt has been accompanied by a refusal on behalf of the federal government to place meaningful regulations on credit card lending practices. The Federal Reserve finally took steps in December to rein in deceptive credit card lending, but as Mike Lillis demonstrates for The Colorado Independent, the new rules are relatively modest given the scope of credit card-related abuses. Lenders can still do pretty much anything they want to a borrower once they miss a payment, and the Fed’s restrictions do not even go into effect until July 2010.

If low wages and predatory credit cards are not enough to push consumers into financial ruin, consider what is taking place in the student loan industry. The government keeps the student loan market going in two primary ways: by directly lending to students and by guaranteeing loans students take out from private lenders like Sallie Mae, making it cheaper for Sallie Mae to extend loans. The government-assisted private sector loans cost taxpayers significantly more money than loans made through the direct loan program.

When student lenders hit the skids this year amid a Wall Street-induced credit crunch, the government responded by financing student loans made through private companies.

But if the government is not only guaranteeing private-sector loans but financing them as well, the resulting scheme is essentially a less efficient version of the direct student loan program, as Cole Robertson explains in a piece for The Nation. Sallie Mae CEO Albert Lord seems to approve of the bailout plan, but has not offered to return one penny of the orgiastic pay he’s accumulated over the past year in return for this taxpayer largess. Lord cashed out over $44 million in stock options in one day during the summer of 2007, and has been targeted by Congressional insider trading investigations for convenient sales of Sallie Mae stock.

A big federal bailout accompanied by outrageous executive compensation. Sounds familiar.

It is truly astonishing to consider how much damage conservatives have done to public attitudes on economic issues over the past 14 years. There is nothing inherently progressive about policy suggestions like like funding emergency health care, paying firefighters and teachers or refusing to allow lenders to arbitrarily change the terms of a contract without borrower consent. This stuff is
basic sanity. At least 2009 promises not to be boring. We will either witness a return to said sanity that would have been unthinkable even a year ago or another depression. Happy New Year.

This post features links to the best independent, progressive reporting about the economy. Visit Economy.NewsLadder.net for a complete list of articles on immigration, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.