The House of Representatives passed sweeping credit card reform legislation Wednesday aimed at limiting abusive and deceptive credit card practices. The measure passed with a resounding 361-64 vote and now heads to the president's desk.
A Republican amendment to allow guns in National Parks also passed, 279-147. House Democratic leaders had decided to split the bill into two parts so as not to force liberal members to vote in favor of the gun rule.
The overwhelming vote is a signal of how far the country's politics have shifted as a result of the financial crisis. Despite popularity in the 90-percent range, the bill never had a chance of passing in previous years.
"I've been in Washington twenty years. For the first nineteen we couldn't even get a committee vote on credit card reform despite these practices," remarked PIRG's Ed Mierzwinski.
Despite the shifting political terrain, Congress was unable earlier to win a similar victory over the banking lobby, which blocked a measure aimed at reducing foreclosures by allowing homeowners to renegotiate mortgages in bankruptcy.
What a difference a president can make.
In the lead-up to the recent vote on anti-foreclosure legislation in the Senate, the White House was nowhere to be found. As the bill marched to its death, Sen. Chris Dodd (D-Conn.) lamented the administration's "ambivalence." With little standing against it, the banking lobby pillaged the Senate, persuading a dozen Democrats to vote against homeowners.
The day after it was killed, the administration released a note saying it still wanted "appropriately tailored bankruptcy language."
Contrast that with credit card reform. On Wednesday night, Dodd, the credit card bill's champion, took to the Senate floor to announce that it was Obama's push for the bill that opened the possibility for its passage.
Obama brought the heads of the credit card companies to the White House. He publicly called for tough reforms. On Thursday, he gave it one of the heftiest pushes he could, holding one of his patented town hall meetings on credit cards.
"These practices, they've only grown worse in the middle of this recession, when people can afford them least," he told the crowd.
What explains the contrasting approaches? Most obviously, it's hard to find a more odious villain than credit card companies. Everybody hates them. And credit card reform is easier to explain than the bill aimed at reducing foreclosures. It would have allowed judges in bankruptcy court to renegotiate - or cramdown - a homeowners mortgage. That takes more time to explain than a bill whose purpose is to prevent credit card companies from punching you in the mouth - a habit every American knows credit card companies have no plan to kick.
"Bankruptcy reform, important as it was, was sort of esoteric. If you went into O'Halloran's Pub, the fellas aren't saying to you, 'What's going on with bankruptcy reform?'" Sen. Charles Schumer (D-N.Y.) told the Huffington Post. "But they might say, 'What are you doing about my credit cards?' The average person feels the second much more than the first, even though both are important."
Opponents of bankruptcy reform were able to shape the terms of the debate effectively. Why should somebody who lied to get a mortgage get bailed out while I play by the rules? Democrats tried to make the case that foreclosures affect everybody and are at the heart of the financial crisis, but Santelli-ism prevailed.
More importantly, the credit card bill is also not a fundamental threat to the structure of the financial industry. Rather than a knife to the gut, it's more a paper cut. Being required to warn consumers before jacking up interest rates may annoy financial institutions, but it won't radically alter the way they do business.
The one piece of credit card reform that did go to the heart of the finance industry went nowhere. Sen. Bernie Sanders, a self-described socialist from Vermont who caucuses with Democrats, introduced an amendment to cap interest rates at 15 percent. Sen. Richard Shelby (R-Ala.) used a parliamentary maneuver to prevent it from coming up for a vote. In the motion to overrule Shelby, only 33 senators stuck with Sanders.
The cramdown bill, on the other hand, went right at it. Allowing homeowners to renegotiate mortgages in bankruptcy would tilt power away from the banks. It would give them an incentive to work out mortgage modifications rather than go to foreclosure. It would threaten the securitized bond market and require investors to do more diligent research about the loans they purchased and bundled.
Obama had company on the sidelines as he watched the banks run up the score on bankruptcy reform. There was little organized push from the left. MoveOn.org, which called its members to action to push the bankruptcy bill over the line in the House was silent during the Senate fight. Labor did some internal lobbying work but, a labor lobbyist told the Huffington Post, its membership was concentrating on grassroots activity on the Employee Free Choice Act. AARP, another public supporter of the bill and a powerful lobby, never activated its membership, an AARP spokeswoman said. The Center for Responsible Lending was arguably the most visible group involved in negotiations, but it has a limited budget and no mass membership.
Progressive groups have been much more vocal in the push for credit card reform, support that Democratic aides say has made it dramatically easier to push the bill. MoveOn activated its members, as did a broad coalition of liberal and consumer organizations.
"We applaud President Obama for his leadership in pushing for reforms of credit card industry practices that unfairly strip billions of dollars from America's families each year," a broad coalition of progressive organizations representing consumers, civil rights groups, small businesses and labor said in a joint statement today.
"We're glad President Obama has reaffirmed his commitment to signing the bill by Memorial Day and urge the Senate to act quickly to meet that deadline."
The president has a powerful bullhorn in his hands, but it only works when he speaks into it.