Loan Shark Prevention Act

Credit card companies who practically wrote the unconscionable Bankruptcy Bill S. 256 [summarized by fellow journaler Duane and discussed in the TPM Special Bankruptcy Edition] say it's necessary because people who default on their debts cause interest rates to rise for the rest of us.

Yet, not surprisingly, there is no provision in the bill compelling said credit card companies to reduce their usurious rates once it passes.

The Loan Shark Prevention Act introduced by Rep. Bernie Sanders (I-VT) seeks to correct that. The Act has three main provisions:

• Cap interest rates at 8% above what the IRS charges income tax deadbeats. Currently, the cap would be 14%, the same level that the Senate approved by a 74-19 vote in an amendment offered by Sen. Al D’Amato in 1991.

• Cap bank and credit card fees at $15. The notion that late fees could climb to $50 is obscene.

• Ban the credit card interest rate bait and switch. Credit card companies are doubling or tripling the interest rates of consumers even though they always paid their credit card bills on-time, based on universal default which allows them to double or triple the interest rates for practically any reason.

With working families already carrying more than their fair share of economic risks, S. 256 shouldn't have passed in the first place. The Democrats who voted for it -- or voted for cloture, same difference -- should've been ashamed of themselves.

If the Democrats are to be the party of the people instead of Big Money, there is no reason for them not to vote for the Loan Shark Prevention Act. This is their chance to redeem themselves and show how they differ with the ruling party.

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