One thing I love about the progressive blogosphere is how lies are almost immediately debunked. That’s why I can’t stand it when occasionally blogs on our side lie. Case in point is an assertion by ArchPundit that an amendment to the Bankruptcy Bill by Senator Mark Dayton (D) to limit credit card industry interest rates would preempt state usury laws. He’s trying to defend Sen. Barack Obama (D), who voted against the Dayton amendment. The implied assertion is that Dayton’s bill would have superceded state usury laws in a way that would have hurt consumers because it would have supposedly invalidated those state statutes that imposed even tougher interest limits – something that he says Obama would not want to do.
Actually, what I said was this:
The only amendment he voted against that progressive would generally support is the limit on interest rates introduced by Dayton. It was rejected with 74 votes against including several Democrats who were generally against the broader bill. The text of the Dayton amendment seemed to be far broader than just about credit cards and preempts state ursury laws. I’d hardly call voting against it as rejection of such a rule in general.
By all accounts, he’d support a cap in a better written amendment–and Durbin voted against the Amendment as well.
All of which is true. It does preempt state ursury laws, it just exempts from preemption those states with lower rates, but that wasn’t the broader point. I linked to what I thought would be the text, but it went to a search and doesn’t connect to the text of the bill. David has the text in his post. More than anything, I didn’t go into the details, because the basic point is that Obama voted against an amendment that may have far broader impact than just credit cards.
The important part of the issue isn’t that it would just preempt credit card rates over 30% to individuals, but what other forms of credit would be affected. The amendment, and the law don’t define credit as credit card only. As a knee jerk reaction, I’d say it’s generally still a good idea since individuals and families shouldn’t be charged above 30% anyway–and in fact, this might have been a good development in fighting pay day loans.
If state laws restrict only credit card rates to 22%, but allow other forms of consumer credit, this law would impact both, probably to the better, but I’d want to know the effects before passing a law.
That said, it might have broader implications related to sole proprietorship business owners, it certainly has implications for more than just credit cards and therefore the meaning of the cap changes. My reading of the definition of consumer credit in Title 11 would suggest it wouldn’t affect sole proprietorships, but I’d want to ensure that is correct. Is it still probably a good idea? Yeah, but I expect elected officials to figure that out before passing the law and Sarbanes made this point during the debate:.
Mr. SARBANES. Mr. President, I rise to underscore the statement just made by the chairman of the Banking Committee. This issue embraced in this amendment is very far-reaching. There have been no hearings on it. The chairman has indicated he intends to do some hearings on issues relating to the matter that is before us. It does not seem to me to be a wise or prudent course to consider what would, in effect, be a very major legislative
step in the absence of appropriate consideration by the committee of jurisdiction; therefore, I intend to also oppose this amendment, primarily on those grounds.The substance is a complicated issue, and in any event it is very clear it needs to be very carefully examined and considered. I do not think that has occurred in this instance, and I hope my colleagues would perceive the matter in the same way.
And this reinforces my point about institutionalism. Simply raging against a vote, but not understanding why it was made or what the implications would have been if the amendment had become law is not anyway to govern.
The question is did Obama in general support such a cap written well, which from David’s piece in the Nation, one could imply Obama would. I’ve asked his office for a response and I’ll be happy to pass along what I hear. If Obama wouldn’t support a cap in principle, I’d be disappointed.