WASHINGTON — A powerful House Democrat is working on legislation to cap credit card interest rates at 16%, yet another sign of lawmakers' growing frustration with the industry.
House Rules Committee Chairman Louise M. Slaughter (D., N.Y.) announced Wednesday that she plans to introduce the bill after the Thanksgiving break. At the helm of the Rules Committee, Slaughter controls the terms of floor debate for all House legislation.
"Things were a lot better for the average person in this country when we had usury caps," she said in a press release touting the legislation. Slaughter called it "criminal" that credit card companies "have exploited people by increasing rates up to 30% and more," and said her bill would stop that.
The move comes after the House earlier this month voted overwhelmingly to immediately impose strict new credit card rules currently set to take effect in February.
Senate Banking Chairman Christopher Dodd (D., Conn.) introduced similar legislation in the Senate that would also freeze rates until the new rules take effect. Prospects for Senate action on such legislation this year all but vanished after Republicans last week blocked a vote on Dodd's bill.
Card companies have been raising interest rates on new balances, hiking minimum payments and lowering credit limits in response to the weak economy and the new regulations. Passed as part of a sweeping credit card law in May, most of the regulations won't take effect until February.
The credit card industry warned Congress that the new rules would result in higher interest rates for new accounts and new balances. But consumer advocates and Democrats claim the industry has gone too far.
Slaughter's legislation would provide some leeway for temporary increases in the cap, according to the press release. It would also limit "exorbitant and unnecessary fees." Slaughter is working on the bill with Reps. John Tierney (D., Mass.) and Michael Capuano (D., Mass.).