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A deal announced today between Senate Banking Committee Chairman Chris Dodd and Sen. Richard Shelby, the panel's top Republican, is likely to speed passage Tuesday of a bill designed to rein in credit card practices. Though the banking industry continues to lobby against the legislation, the bill is expected to receive a large bipartisan vote, giving it critical momentum as lawmakers turn to working out differences between House and Senate card-reform bills. "We are certainly on track to get this done by Independence Day," says Jaret Seiberg, an analyst with Washington Research Group, a division of Concept Capital. "The politics of the credit card bill are so populist that it's hard for any member in this environment to oppose it." After a Senate Banking Committee vote last month failed to win any Republican support and lost one Democrat–Sen. Tim Johnson of South Dakota–political analysts had predicted Dodd would have to soften his bill to ensure Senate passage. But the deal struck between Dodd and Shelby would create more restrictions than the earlier version of the bill and goes beyond federal regulations set to go into effect in July 2010. It incorporates changes sought by the Obama administration, including a requirement that card companies get customers' permission before charging over-the-limit fees. The bill also would make it tougher for borrowers younger than 21 to obtain credit cards. Borrowers under that age would have to get a parent to cosign for the card or prove they had sufficient income to cover their credit limits. The bill did soften a requirement that forbid card companies from increasing interest rates on existing balances. Under the Dodd-Shelby bill, issuers could increase rates if a consumer is 60 days late, although they must reevaluate the customer's account in six months and reduce the interest-rate hike if the consumer's credit improved. By comparison, the House bill, which passed April 30, only gives card issuers the right to raise rates if a customer is 30 days late.
