Of all the financial reform rules debated in the past few weeks, few would have impacted as many consumers as the one championed by Sen. Sheldon Whitehouse.
The Rhode Island Democrat introduced an amendment that would have let states cap credit-card interest rates. Had it passed, it would have closed a loophole that has long allowed credit card companies to headquarter in states that don't cap interest rates on credit cards and then export high rates to other more consumer-friendly jurisdictions.
Whitehouse would have allowed states to impose restrictions on rates charged by out-of-state lenders.
But it was defeated Wednesday night by a 60-35 vote. Two Republicans, George LeMieux of Florida and Thad Cochran of Mississippi, voted with 32 Democrats and Independent Bernie Sanders of Vermont to support consumers in their fight against lenders.
Among those voting for megabanks, which dominate the credit card industry, were Ted Kaufman of Delaware and Maria Cantwell of Washington, two Democrats who have been particularly critical of the influence wielded by the nation's largest financial institutions. Both senators voted to break up the nation's megabanks on a separate amendment to the Senate's financial reform bill.
Kaufman defended his vote when questioned by the Huffington Post about the apparent inconsistency.
"It creates a patchwork of interest rates and laws around the country," he said. "You wouldn't know... where your credit card company is, what interest rates you're paying, and what the rules are.
"That being said, I do represent Delaware and in Delaware the credit card business is a major, major part of our industry, just like in West Virginia [where] coal is a major part of their industry," he said.
Delaware, like South Dakota, is one of the few states that doesn't cap interest rates. Because of a 1978 U.S. Supreme Court decision barring states from capping interest rates charged by out-of-state lenders, Delaware and South Dakota are home to the biggest credit card companies and lenders.
"I am not running for reelection," Kaufman said. "My name says, 'Ted Kaufman, D-Delaware.' I know some people want to say, 'Here you voted for Delaware.' I'm fine with that."
Referring to the series of amendments and votes cast in the Senate's attempt to reform the financial industry and how it's regulated, Kaufman said, "There are some hard ones. This was not hard."
Just 14 Delaware-based banks hold about $337 billion in credit card debt, according to the latest quarterly figures from the Federal Deposit Insurance Corporation. That's nearly half of all credit card debt held by the nation's nearly 8,000 banks.
Meanwhile, the average credit card interest rate (for purchases) stands at 14.04 percent on variable-rate cards, and 13.7 percent on fixed-rate cards, according to the latest weekly survey by Bankrate.com.
Those rates have steadily climbed during the year. During the first week of January, the average fixed-rate card charged 13.47 percent, while the average variable-rate card charged 11.54 percent.
Credit cards charging upwards of 30 percent are common. Many lenders jacked up their rates in preparation for the recently-enacted credit-card reform legislation, which would have prohibited arbitrary rate hikes.
The Federal Reserve's main policy-making body noted during its April meeting that the spread between credit card rates and two-year Treasuries had widened since January. A widening spread means that consumers are borrowing at higher rates relative to what lenders are being charged.
Of the nearly $717 billion of credit card debt held by the nation's nearly 8,000 banks, more than two-thirds of it, or about $475 billion, is held by just four companies: Bank of America, JPMorgan Chase, Citigroup and Wells Fargo.
Bank of America's and JPMorgan Chase's main credit card lenders are based in Kaufman's home state of Delaware; Citigroup and Wells Fargo run their big credit card operations out of South Dakota.
Together, South Dakota- and Delaware-based banks hold about two-thirds of all the credit card debt in the nation's banking system.
Our 2024 Coverage Needs You
It's Another Trump-Biden Showdown — And We Need Your Help
The Future Of Democracy Is At Stake
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
The 2024 election is heating up, and women's rights, health care, voting rights, and the very future of democracy are all at stake. Donald Trump will face Joe Biden in the most consequential vote of our time. And HuffPost will be there, covering every twist and turn. America's future hangs in the balance. Would you consider contributing to support our journalism and keep it free for all during this critical season?
HuffPost believes news should be accessible to everyone, regardless of their ability to pay for it. We rely on readers like you to help fund our work. Any contribution you can make — even as little as $2 — goes directly toward supporting the impactful journalism that we will continue to produce this year. Thank you for being part of our story.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
It's official: Donald Trump will face Joe Biden this fall in the presidential election. As we face the most consequential presidential election of our time, HuffPost is committed to bringing you up-to-date, accurate news about the 2024 race. While other outlets have retreated behind paywalls, you can trust our news will stay free.
But we can't do it without your help. Reader funding is one of the key ways we support our newsroom. Would you consider making a donation to help fund our news during this critical time? Your contributions are vital to supporting a free press.
Contribute as little as $2 to keep our journalism free and accessible to all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you'll consider contributing to HuffPost once more.
Support HuffPostAlready contributed? Log in to hide these messages.