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Why You Were Left Out of Credit-Card Reform
By Marc Tracy
First over at his old Entrepreneurial Agenda blog, and now at his new one, You're The Boss, Robb Mandelbaum has done a stellar job cataloguing how the recent credit-card reform law passed small businesses and small-business cards over. (Time to note that our sponsor is American Express OPEN.) The bill instituted a number of protections for consumers: against sudden interest rate hikes and exorbitant fees, for example. But the law only applies to personal cards. Yesterday, Mandelbaum filed a great, lengthy, heavily-sourced report that attempts to conduct the forensic, crime-scene analysis: what did small businesses ever do to Congress to make them so ignored when crunch-time came? The question seems more stark when we recall that the final bill passed the Senate 90-5.
The more specific question, which we mentioned at the time, is: who or what killed Sen. Mary Landrieu's amendment? Landrieu (D-La.), recall, is the chair of the Small Business & Entrepreneurship Committee, and she did a great job trying to look out for small business people: her amendment would have extended the protections to corporate cards tied to businesses with under 50 employees, as well as to personal cards used for business purposes (where the business, again, has under 50 employees). The amendment also would have exempted cards with $50,000, not $25,000, limits. Yet that bill was killed in committee--the Senate Banking Committee. And moreover, its killers were bipartisan--meaning one should immediately start to look to both ranking member Richard Shelby (R-Ala.) and Chairman Christopher Dodd (D-Conn.)
Broadly speaking, according to Mandelbaum, Republicans had significant problems with expanding the protections to so many additional cards--less, they claim, because they believed such an expansion would be an out-and-out bad thing and more because its potential repercussions had not been sufficiently investigated. As for Democrats, while certain of them may have had the same objection, mainly they wanted to pass the bill's other provisions--the one that are now law--without risking losing substantial GOP support.
They say there are two things where people don't want to know how they're made: sausages and laws. Mandelbaum has some great additional reporting on the particular process behind Landrieu's failed sausage, and you should definitely check it out.
But suffice to say that though the law does provide for the Federal Reserve to study the issue of expansion, Mandelbaum is pessimistic on such an expansion being enacted anytime soon.
And suffice to say that, er, that's bulls**t.
Comments (0)June 26, 2009 9:54 AM
