What: All Issues : Government Checks on Corporate Power : Banks/Credit Card Companies : S 3217. (Overhaul of financial regulations) Whitehouse of Rhode Island amendment that would allow individual state laws capping fees and interest rates to apply to consumer credit/On agreeing to the amendment
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S 3217. (Overhaul of financial regulations) Whitehouse of Rhode Island amendment that would allow individual state laws capping fees and interest rates to apply to consumer credit/On agreeing to the amendment
senate Roll Call 159     May 19, 2010
Y = Conservative
N = Progressive
Winning Side:
Conservative

This vote was on an amendment by Sheldon Whitehouse, D-R.I., that would have allowed individual state laws capping fees and interest rates to apply to consumer credit.  It was offered to a bill that aims to close gaps in financial regulations, strengthen oversight of consumer lending and more closely oversee complex financial investments. 

Whitehouse said his amendment would allow state laws capping fees and interest rates to apply to banks that extend credit to consumers who live in that state, even if the bank is in another state.

“This is not a reach of Federal authority. This is traditional federalism and States rights to honor the laws of the States whose citizens sent us here and who wish to protect them from abusive interest rates,” Whitehouse said.  “If you vote in favor of this amendment, you are also voting in favor of your community banks, your local State-chartered banks, which don’t take advantage of this loophole, which don’t create their headquarters in a faraway State that gives them zero consumer protection restriction and allows them to target their marketing against the laws of the home State. The home State banks have to play by the laws of the home State, and this would level the field for your home State banks.”

Johnny Isakson, R-Ga., said Whitehouse’s amendment would “take us back to a period of time post 1982 or 1983, when interest rates went to 16 ¾ percent.”

“So I want to caution the body, in considering the Whitehouse amendment, to be very careful what you ask for. Because what you will do is you will put an end to credit in the housing business and in many other types of instruments in the United States, and you will have 50 different usury regimens in 50 different States. You will create a fixed-rate environment by the government, not by competition. What effectively happens is a rise in the cost of credit, a rise in the cost to the consumer, and in the end what I am sure is intended to be beneficial to the consumer will, in fact, cost the consumer more money and be disastrous to the expansion of credit in a time where there is very little credit as it is,” Isakson said.

By a vote of 35-60, the amendment was rejected.  Of Democrats present, 32 voted for the amendment (including all of the most progressive members) and 21 voted against it.  All but two Republicans present voted against the amendment.  The end result is that the measure went forward without language that would have allowed states to cap fees and interest rates charged on their citizens even if the bank extending them credit was out of state.

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